On Wednesday, Dinesh Kumar Khara, the Chairman of the Indian State Bank (SBI) and one of the most prominent figures in India’s banking sector, retired from his position. During his retirement speech, Khara presented an ambitious profit target of INR 1 trillion to the new chairman, C.S. Shetty. This bold goal highlights the stellar growth achieved during Khara’s four-year tenure at SBI, a period marked by remarkable profitability and investor returns. Let’s delve into the details of this target and the legacy Khara leaves behind.
Targeting INR 1 Trillion in Profits
Dinesh Khara, who celebrated his 63rd birthday on the same day, took over as SBI Chairman on October 7, 2020, amidst the COVID-19 crisis. Under his leadership, SBI’s annual profit surged from INR 20,410 crore in FY 2021 to INR 61,077 crore in FY 2024—a staggering growth of over 200%. Now, as he hands over the reins to C.S. Shetty, he has set an ambitious target for the ongoing fiscal year: reaching INR 1 trillion in profit. Khara earned the nickname “Profit King” in the banking sector due to his exceptional ability to enhance the bank’s profitability. Notably, SBI’s cumulative earnings during his tenure reached INR 1.63 trillion, outpacing the INR 1.45 trillion earned over the previous 64 years.
Your Performance Metrics Under Khara’s Tenure
In the first quarter of FY 2025, SBI’s deposit base grew more than 41%, reaching INR 49,01,726 crore, up from INR 34,70,462 crore in the first quarter of FY 2021. Additionally, the loan book saw a 60% increase, climbing to INR 38,12,087 crore. Khara’s tenure also witnessed significant improvements in the bank’s productivity metrics, with profit per employee nearly sextupling to INR 30 lakh. He expressed optimism about the bank’s potential to achieve a post-tax profit of INR 1 trillion soon, indicating that strategic decisions made during his leadership were on the right track. In the June quarter, SBI reported a post-tax profit of INR 17,035 crore, reflecting a year-on-year increase of 0.89%.
Stellar Growth in Shareholder Value
Under Khara’s stewardship, SBI’s shares experienced an impressive rise from INR 191.6 to INR 815, marking a remarkable 325% increase. However, Khara remains aware that despite this growth, the bank has not yet achieved its true potential as reflected in its market valuation. He voiced his concerns, stating, “I’m not happy. How can I be happy? We are not getting our rightful value; other players in the market are better positioned in terms of share prices.”
SBI’s Position in the Market
As of now, SBI stands as the seventh-largest listed company in India based on market capitalization, with a valuation of approximately INR 7.3 lakh crore. In FY 2024, SBI emerged as the second-highest profit-earning company in India, just behind Reliance Industries (RIL). Owing to its status as one of the top PSU stocks in the banking sector, investor enthusiasm surrounding SBI remains high, with a 27% return this calendar year, significantly outperforming market benchmarks.
