State Bank of India (SBI) has retained the backing of brokerage firm Jefferies, which has maintained a ‘Buy’ rating on the lender and set a target price of Rs 1,300 per share.
The target implies an upside potential of 27.9 percent from the previous closing price of Rs 1,020.
SBI shares ended the session at Rs 1,020, up 0.35 percent. The stock has gained 29 percent over the past year. The bank commands a market capitalization of Rs 9,41,938 crore.
Jefferies sees healthy growth outlook
Jefferies said healthy loan growth, stable profitability and reasonable valuations support its positive view on the stock.
The brokerage expects SBI to deliver a loan growth CAGR of around 13 percent and a Return on Equity (ROE) of 14 percent over the medium term.
It noted that the stock is valued at around 1.4 times FY27 adjusted price-to-book.
Corporate loan repricing remains important
According to Jefferies, repricing of corporate loans will play a key role in sustaining net interest margins (NIMs).
The brokerage said deposits typically mature faster than assets. As a result, deposit rates may adjust more quickly, making timely loan repricing necessary to protect profitability.
Operating efficiency improves
Jefferies highlighted improvements in some operating metrics.
The brokerage noted that:
- Deposit-per-branch productivity has improved steadily.
- Dependence on Priority Sector Lending Certificates (PSLCs) has reduced.
- These trends have helped strengthen operating efficiency and earnings.
Fee income provides support
Strong bancassurance fee income has emerged as an additional source of revenue for the bank, Jefferies said.
The brokerage also noted that SBI continues to maintain limited buffer provisions. However, it flagged the shift to the Expected Credit Loss (ECL) framework as a modest risk.
FY26 performance
SBI reported higher profit and operating income during FY26.
Key financial highlights:
- Net profit rose 12.88 percent year-on-year to Rs 80,032 crore.
- Operating profit increased 11.25 percent to Rs 1,23,015 crore.
- Return on Assets (ROA) stood at 1.12 percent.
- Return on Equity (ROE) came in at 18.57 percent.
- Whole Bank NIM stood at 2.91 percent.
- Domestic NIM was 3.03 percent.
Advances cross Rs 49 trillion
Loan growth remained strong across segments.
Segment-wise growth in advances:
- SME advances grew 20.99 percent.
- Agriculture advances rose 19.68 percent.
- Retail advances increased 15.22 percent.
Overall advances expanded 16.87 percent year-on-year, taking the loan book beyond Rs 49 trillion.
Deposits crossed Rs 59 trillion during the year.
Growth in deposits included:
- Savings deposits growth of 10.60 percent.
- Retail term deposit growth of 14.77 percent.
Asset quality stays healthy
SBI continued to report strong asset quality metrics.
Key indicators were:
- Gross NPA: 1.49 percent
- Net NPA: 0.39 percent
- Credit cost: 0.37 percent
- Provision coverage ratio including AUCA: 91.97 percent
Headquartered in Mumbai, State Bank of India traces its origins to 1806. It is India’s largest public sector bank and operates as a multinational financial services institution.
TL;DR:
Jefferies has maintained a ‘Buy’ rating on SBI with a target price of Rs 1,300, implying a 27.9 percent upside. The brokerage expects steady loan growth, stable margins and continued improvement in operating metrics.
AI summary:
- Jefferies retained a ‘Buy’ rating on SBI.
- Target price of Rs 1,300 implies a 27.9% upside.
- Corporate loan repricing is seen as crucial for margins.
- FY26 net profit rose 12.88% to Rs 80,032 crore.
- Gross NPA and Net NPA stood at 1.49% and 0.39%, respectively.
