In a surprising turn of events, the State Bank of India (SBI) has overtaken Mukesh Ambani-led Reliance Industries to become the most profitable company in India, despite Reliance’s standing as the country’s most valuable firm.
What Happened: SBI, the fifth most valued company on the BSE, saw a 24% year-on-year surge in its March quarter net profit, reaching ₹20,698 crore. This figure outstripped the earnings of Reliance Industries, which has long held the title of India’s most profitable company.
Reliance Industries’ Q4 net profit was ₹18,951 crores, a 1.8% dip from ₹19,299 crores recorded last year.
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Moreover, SBI also leads in terms of revenue from operations, with an annual revenue of ₹1.11 lakh crore, a significant 19% increase from the previous year’s figure of ₹92,951 crores. This cements SBI’s dominant position in the market, despite Reliance Industries’ market capitalisation standing at ₹19.05 lakh crore.
Why It Matters: The shift in profitability rankings comes in the wake of SBI’s strong Q4 results. The bank's asset quality improved in the March quarter. Its gross non-performing asset (GNPA) stood at 2.24% as against 2.78% last year, while net NPA came in at 0.57% compared to 0.67% last year.
Reliance Industries, on the other hand, experienced a 5.0% decline in revenue in the Oil to Chemicals (O2C) segment. However, Jio Platforms (JPL) saw its revenue rise by 11.7% year-over-year, driven by a significant subscriber increase of 42.4 million across mobility and home services, alongside an improved mix in Average Revenue Per User (ARPU).
Meanwhile, following SBI’s impressive Q4 performance, several brokerages raised their price target for the bank’s shares, further boosting investor confidence. Nomura maintained its "buy" rating for the stock raising the price target to ₹1,000 from ₹825 previously.
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Photos courtesy: Wikimedia and Flickr
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