The share price of State Bank of India (SBI) jumped over 6 percent on Thursday as brokerages raised their price targets on the stock after the lender reported better than estimated earnings for the quarter ended September 2020.

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The stock rose as much as 6.7 percent to an intraday high of Rs 220.95 apiece on the BSE. At 10 am, the shares were trading 5.46 percent higher at Rs 218.35 as against 1.24 percent gains in the benchmark Sensex.

The country’s largest lender reported a 51.9 percent year-on-year growth in standalone profit for the September quarter, led by lower provisions and higher net interest income. The bank's standalone net profit increased to Rs 4,574 crore during the quarter as compared to Rs 3,011.7 crore in the year-ago period. Net profit beat CNBC-TV18 analysts’ poll estimates of Rs 3,682.3 crore.

Net interest income (NII) during Q2FY21 increased by 14.6 percent to Rs 28,182 crore from Rs 24,600 crore, YoY. Domestic Net Interest Margin (NIM) improved to 3.34 percent in Q2FY21, registering an increase of 12 bps YoY.

Gross NPAs as a percentage of gross advances decreased by 10 bps to 5.3 percent from 5.4 percent and net NPAs as a percentage of net advances fell by 30 bps to 1.6 percent from 1.9 percent, on a sequential basis.

SBI on Thursday said that the lender was "quite comfortable" in terms of capital and hence would not consider listing YONO in this financial year.

“Won’t list YONO in this financial year. When it comes to capital, we are quite comfortably placed and also we have recently raised our tier-I and tier-II bonds at very competitive pricing. So not at this point in time; maybe at an opportune time we will come to market for raising capital,” said Dinesh Kumar Khara, chairman at State Bank of India, in an interview with CNBC-TV18.

Read here: SBI Q2 net profit jumps 52% YoY to Rs 4,574 crore, NII up 15%; beats estimates

Here’s what brokerages have to say:

CLSA

State Bank of India’s 2QFY21 results were reassuring with NII/core PPOP growth of 15 percent YoY and strong commentary on asset quality. Collections at 97 percent are strongest for SBI among top banks, driving guidance of just Rs 600 billion (2.5 percent of loans) of slippages and restructuring expected in FY21, CLSA said.

The brokerage has increased FY2021/22/23 estimates 64 percent/17 percent/12 percent and now expects SBI to deliver 9.7/11.9 percent ROEs in FY2022/23. Valuations at just 0.35x one-year forward book are cheap, hence it expects a big rerating.

CLSA reiterates a 'Buy' rating and raised the target price to Rs 330 from Rs 310.

Also Read: SBI Q2: New bad loan addition, restructured accounts will not exceed 2.5% of book in FY21

Nomura

Nomura has a 'Buy' rating on the stock and raised the target price to Rs 275 per share as the bank’s Q2 earnings operationally were broadly in-line with the brokerage’s estimates.

Collection efficiency of over 97 percent was in-line with front-line private banks. A higher share of PSUs aided better asset quality. However, agriculture and SME slippages of Rs 9,000 crore and Rs 5,100 crore were a negative surprise, Nomura said.

The brokerage expects SBI to see credit cost similar to those of front-line banks and normalize in FY22. It is of the view that the valuations are comfortable and expects re-rating as RoE normalises to 11 percent by FY23.

ICICI Securities

SBI's Q2FY21 matched expectations with operating metrics suggesting performance sustainability in the near term. "This gives us the confidence to revise earning upwards and reaffirm our positive stance by virtue of collection efficiency (ex-agri) excluding arrears settling at 97 percent for Q2FY21, estimated slippages + restructuring at 2.5 percent of advances, despite slippages, improved traction in retail credit, that too directed towards better-rated customer profile or secured assets and NIMs further expanded 10bps to 3.34 percent," the brokerage said.

ICICI Securities maintained 'Buy' with a target price of Rs 272.

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