State Bank of India’s core income for the March quarter missed analyst expectations, while slippages also rose on a sequential basis. The stock ended with losses of close to 7% on Friday.
Nomura Downgrades On Weak Operating Performance
Nomura downgraded SBI to “neutral” from its earlier rating of “buy” and trimmed its price target to ₹1,140 from ₹1,205 earlier.
The brokerage said that higher sustainable credit costs on transition to new ECL norms may pose a risk to the lender’s Return on Assets (RoA) trajectory.
SBI currently trades at 1.2 times its financial year 2028 estimated book-value-per-share and therefore, it does not expect any material re-rating from current levels.
The lower multiples are a reflection of Nomura’s concerns on the sustainability of SBI’s Return on Equity (RoE), the brokerage said, adding that while the management maintained its Net Interest Margin (NIM) guidance of 3%, it expects them to remain under pressure in the near-term.
IIFL Downgrades On Weak Earnings Outlook
IIFL has also downgraded SBI to “Add” from its earlier rating of “Buy” and cut its price target to ₹1,140 from ₹1,230 earlier.
The brokerage anticipates a 13% Compounded Annual Growth Rate (CAGR) for SBI’s advances and expect margins to improve by seven basis points over financial year 2026-2028. It also expects average credit costs of 50 basis points over financial year 2027-2028 from 40 earlier.
A lower Net Interest Income led to the brokerage downgrading the stock and expects SBI’s Earnings Per Share (EPS) to grow only at a 7% CAGR over financial year 2026-2028. This is in comparison to 11% to 20% growth projected for its private peers. As a result, IIFL has also cut SBI’s earnings growth estimates by 4% and target multiple to 1.2 times.
Macquarie Remains Bullish
Macquarie maintained its “buy” rating on SBI with a price target of ₹1,150, stating that asset quality of the lender remains a bright spot.
The stock now trades at 1.6 times its estimated financial year 2027 price-to-book-value, which, according to the brokerage is “comfortable”, given the expected RoEs of 15%.
JPMorgan Sees Higher Levels
JPMorgan maintained its “overweight” rating on the stock with a price target of ₹1,225.
It said that while its core income was a miss on their expectations, asset quality remains benign, even as slippages increased slightly on seasonality.
UBS is “Neutral”
UBS is “neutral” on SBI with a price target of ₹1,080, stating that it expects the bank’s RoA to see downward pressure as treasury gains and credit costs normalize, while margin trends remain subdued.
It further added that SBI’s RoA could be at 0.95% over financial year 2027-2028 and that the risk-reward at current valuations appears “fair.”
50 analysts have coverage on SBI, of which 43 have a “buy” rating and the rest have a “hold” recommendation.
Shares of SBI are among the top Nifty 50 losers on Monday, now trading 4% lower at ₹977.9. The stock is now down 11% across Friday and Monday.
