Despite the benefits of large deposit flows and strong deposit growth in a slow growth environment, the State Bank of India (SBI) has seen its share price fall year-to-date. due to the controversial Adani exposure. However, according to Gurmeet Chadha, managing director and chief investment officer of Complete Circle Capital, there is still “comfort” in valuation for SBI as it is trading at 1x book value at the level. 525 Indian rupees ($6.4) a share. SBI revealed in February that its exposure to Adani Group was just 0.9% of its total loan balance, which Fitch Ratings deemed insufficient to pose a significant risk to its credit profile. used by Indian banks. However, it warned that state-owned banks could feel pressure to refinance Adani entities if foreign banks reduce investors’ exposure or appetite for the asset. group debt weakened in global markets. However, analysts at Investec feel SBI stock’s 14% drop this year is excessive and the stock is trading below its long-term average. Additionally, Investec expects SBI to report a 30% year-over-year increase in net interest income. “While we have conservatively estimated that the Bank will report system-appropriate Advance growth, if the Bank continues to capture market share as it has in the past three quarters, we hopes to upgrade our estimates and consensus,” analyst Karthik Velamakanni wrote in a note to clients on April 6. Nearly all analysts — 43 out of 44 — are on the stock. State-owned lenders’ bonds all have buy ratings. The consensus price target of all analysts compiled by FactSet is also towards Rs 717 crore a share, representing a gain of 36%. SBIN-IN HDFCBANK-IN One-year line SBI shares are also traded over the counter in the US and on the London and Frankfurt stock exchanges. Chadha noted that SBI has transformed its retail and lending books and made significant strides in digital initiatives while showing a good change in quality metrics. asset. HDFC over SBI If taking a more constructive long-term view of Indian banks in general, Chadha prefers HDFC Bank over SBI as it is merging with HDFC – which he describes as having “a great meaning” – creating a colossal fortune of nearly $300 billion. According to Chadha, the merger will cause them to disrupt the “Micro, Small and Medium Enterprises” market, where the bank has forecast a market share improvement of 2% to 3%. Chadha also said the combined HDFC entity would account for about a fifth of India’s mortgage sector, offering economies of scale and pricing power. Shares of HDFC Bank are up 4% this year, and analysts’ price targets point to a further 13% gain over the next 12 months. While acknowledging that SBI subsidiaries such as SBI Cards or Asset Management could have upside potential overall, adding around Rs 750 per share as expected by some analysts compared to the level current price is 560 rupees per share, Chadha pointed out that this is true for many banks including HDFC which also has several subsidiaries including Asset Management and life insurance in the combined organization of Surname. However, when asked who is the winner between both these stocks? His answer was clear: “I would go with HDFC if I had a three-year vision”.