State Bank of India's (SBI) March-quarter profit grew more than four-fold but still remained lower than analysts' estimates. The lender reported a standalone net profit of Rs 3,580.81 crore in the fourth quarter of fiscal 2020 as against Rs 838.4 crore in the same period last year. The CNBC-TV18 poll had estimated a profit of Rs 5,714.8 crore.

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Higher loan loss provisions, employee costs and slower NIM growth dented the profit. The lender also saw a 0.8 percent year-on-year decline in net interest income due to interest reversals on agri slippages and slower loan growth.

Despite the decent performance, most brokerages cut target price for the stock. They, however, retained the ‘buy’ rating due to cheap valuations and improvement in asset quality.

The asset quality improved on account of lower slippages. Gross non-performing assets (GNPA) declined to Rs 1,49,091.85 crore from Rs 1,59,661.19 crore in the previous quarter. Gross NPA as a percentage of gross advances fell 79 bps to 6.15 percent versus 6.94 percent, QoQ.

Kotak Securities reduced the lender's target price to Rs 340 per share from Rs 420 earlier but said that the bank is well-positioned to weather COVID-19. It added that SBI offset a weak operating performance with better-than-expected trends on asset quality.

Prabhudas Lilladher also lowered its target price from Rs 317 to Rs 254 but maintained a 'buy' rating on the stock. It believes slippages should be manageable with a similar rate in FY21/FY22. Bank disclosed 22 percent of its customers are under moratorium who have paid less than two installments and did not disclose value-wise, hence it is not comparable with peer banks.

Bank's NIM guidance was quite cautious as the deposit continues to flow in, the brokerage further said.

HDFC Securities also reduced its target price to Rs 270 per share from Rs 316 earlier while maintaining a 'buy' rating. It added that current valuations and strong deposit underpin the stance and expects NIMs of 2.9 percent over FY21-22. It also stated that despite the low moratorium percentage, COVID-19 may disrupt the current trend of asset quality.

Axis Capital lowered the company's target price to Rs 260 per share from the Rs 350 earlier. It said that outlook is weak and valuations are inexpensive. Weak macros will entail higher NPLs and a weaker operating profile straining the earning, Axis Capital noted.