State Bank of India shows strong growth potential; buy recommendation with a target price of ₹1,100, reflecting positive earnings performance | Photo Credit: NIHARIKA KULKARNI
CMP: ₹960.75
State Bank of India (SBI) saw a strong quarter as core PAT beat PLe by 14 per cent since NII/NIM and core fees surprised positively. Despite the estimate of NIM fall, reported NIM increased by 7bps QoQ to 3.09 per cent, led by a decline in deposit cost, partly driven by an increase in daily average CASA. Core fees were more due to a rise in interchange fees, part of which may be sustainable. Loan growth was a bit better at 3.9 per cent q-o-q, which was broad-based.
While we have factored in 13 per cent y-o-y growth for FY26, there is adequate liquidity to fund higher growth, as LCR is healthy at 143 per cent. Asset quality continues to remain benign as net slippage was 9bps lower at 26bps. Earnings quality remains one of the best, owing to profitability and RoRWA-focused credit growth. Provisions were more at ₹5,400 crore (Ple ₹4,430 crore) due to an increase in std. Asset provisions. Core PAT was 11.9 per cent above PLe at ₹14,160 crore; PAT was ₹20,160 crore.
As per the bank, ECL impact would be limited due to long road-map for implementation (4 years i.e. Mar’31)
Due to higher NII/fees, we raise FY26/27E core PAT by avg. 6 per cent. We keep multiple at 1.3x but increase SOTP-based TP to ₹1,100 from ₹960 as we roll forward to Sep’27 core ABV.
Published on November 6, 2025
