State Bank of India share price plummeted 4% after its March quarter earnings missed Street expectations on core operating performance. However, at least three brokerages retained positive calls on the stock, betting on steady loan growth, resilient asset quality and the bank’s ability to hold return ratios.
Nuvama maintained a ‘Buy’ rating with a target price of Rs 1,200, Motilal Oswal reiterated ‘Buy’ with a target price of Rs 1,300, while Elara Securities retained its Accumulate call with a target price of Rs 1,209.
The reports came after the country’s largest lender reported Q4FY26 net profit of Rs 19,683.8 crore, up 5.6% year on year from Rs 18,642.6 crore, though down 6.4% sequentially from Rs 21,028.2 crore due to pressure on net interest margins and treasury income.
Nuvama on State Bank of India: ‘Buy’
Nuvama retained its ‘Buy’ rating on State Bank of India with a target price of Rs 1,200, implying an upside of nearly 18%. The brokerage said the lender posted a weak quarter because of a sharp decline in margins and treasury losses, though lower provisions prevented a deeper hit to profitability.
Nuvama noted that net interest margin fell to 2.81% in Q4FY26 from 2.98% in Q3FY26 due to repo-linked loan repricing, a 5 basis point marginal cost of lending rate cut and pressure from treasury income. Even with the margin compression, the brokerage pointed to healthy business traction. Loan growth rose 17% year on year and 5% sequentially in Q4FY26, while deposits increased 11% year on year and 5% quarter on quarter.
The brokerage also said stress indicators remained contained despite a rise in slippages. Gross non-performing assets improved to 1.49% in Q4FY26 from 1.57% in Q3FY26, while credit cost remained below 50 basis points. Nuvama added that State Bank of India continued to gain confidence from its strong retail franchise and stable deposit profile, even as earnings faced pressure from treasury volatility.
“Healthy loan growth continues; CASA growth to follow,” Nuvama said in its report while adding that the lender remained confident of sustaining domestic net interest margins above 3% in FY27.
Nuvama also drew attention to the bank’s guidance for FY27, where management projected credit growth of 13% to 15%, cost-to-income ratio below 50% and return on assets above 1%. The brokerage said those projections supported its positive stance despite trimming FY27 earnings estimates by 4.4%.
“Retail loan growth was very high at 112%, LTV on retail gold stayed low at 52% with yields at 8.5% to 9%,” the brokerage said while discussing segmental trends in the loan book.
Motilal Oswal on State Bank of India: ‘Buy’
Motilal Oswal reiterated its ‘Buy’ recommendation on State Bank of India and fixed a target price of Rs 1,300, indicating an upside potential of around 28%.. The brokerage said the bank’s core operating numbers disappointed because of lower margins and treasury losses, but robust loan growth and resilient asset quality supported the longer-term earnings profile.
The brokerage noted that net interest income increased 4% year on year to Rs 44,380 crore in Q4FY26, though it declined 1% sequentially because net interest margin contracted 17 basis points quarter on quarter to 2.81%. It added that treasury losses of Rs 1,470 crore weighed on overall profitability during the quarter. Even so, operating expenses declined 5% year on year to Rs 33,990 crore, while provisions fell sharply by 55% year on year to Rs 2,870 crore.
Motilal Oswal said State Bank of India continued to deliver strong business momentum across segments. Advances expanded 17.2% year on year to Rs 48,800 crore in Q4FY26, led by retail, agriculture and corporate lending. Deposits climbed 11% year on year to Rs 59,800 crore, while the current account savings account ratio improved to 39.5% from 39% in the previous quarter.
“SBI remains confident of delivering credit growth of 13-15% going ahead and does not intend to grow materially ahead of the broader macro environment,” Motilal Oswal said in its report.
The brokerage also highlighted the lender’s improving bad loan ratios. Gross non-performing assets eased to 1.57% in Q4FY26 from 1.82% in Q4FY25, while net non-performing assets stood at 0.39% against 0.47% a year earlier. Provision coverage ratio remained healthy at 74.4%.
Motilal Oswal trimmed its FY27 and FY28 earnings estimates by 3% and 5% respectively because of lower margin assumptions, though it maintained that return on assets would remain around 1% and return on equity near 15.3% in FY27.
“We estimate FY27 RoA/RoE at 1.0%/15.3%. Reiterate ‘Buy’ with a TP of INR1,300,” the brokerage said.
The brokerage further said management remained confident that corrective measures on loan mix and deposit pricing would help domestic margins recover to above 3% in FY27.
Elara Securities on State Bank of India: ‘Accumulate’
Elara Securities retained its Accumulate rating on State Bank of India with a target price of Rs 1,209, implying an upside of nearly 19%. The brokerage described the March quarter as “uncharacteristically weak” because of softer core income offset otherwise stable asset quality trends.
Elara said net profit for Q4FY26 came in at Rs 19,700 crore, down 6% sequentially, although lower provisions and a lower tax rate helped the lender stay marginally ahead of its estimate. The brokerage said domestic net interest margin declined 18 basis points sequentially, which dragged net interest income down 1.8% quarter on quarter. It attributed the pressure largely to faster growth in treasury bill linked corporate loans and lower yields.
Even with margin weakness, Elara pointed to strong balance sheet growth. Advances rose 16.9% year on year and 5.3% sequentially in Q4FY26, while deposits climbed 11% year on year and 4.8% quarter on quarter. The brokerage also said the bank retained strong liquidity and growth levers despite moderation in the liquidity coverage ratio to around 124%.
“Robust business momentum continues with advances up around 5.4% quarter on quarter and deposits up around 4.8% quarter on quarter, leading to a domestic CD ratio of around 73%, indicating SBIN retains growth levers,” Elara Securities said in its report.
The brokerage added that stress formation remained under control despite a seasonal rise in slippages from the MSME and agriculture portfolios. Gross non-performing assets improved to 1.49% in Q4FY26 from 1.82% in Q4FY25, while net non-performing assets remained at 0.39%.
Elara also said the key issue for the Street would be whether State Bank of India could sustain return on assets above 1% amid ongoing margin pressure and already low credit costs. However, it maintained that the lender still looked better placed than many peers because of its balance sheet strength and business momentum.
“We believe SBI remains better placed than peers and is well-positioned to deliver 1%+ ROA and above 15% ROE in the near\-term, supported by strong business momentum and healthy asset quality trends,” the brokerage said.
Conclusion
Brokerage commentary after State Bank of India’s March quarter earnings showed a common thread despite differing target prices. Analysts acknowledged that treasury losses and lower lending margins hurt near-term profitability, yet they continued to back the lender on the strength of its loan growth, improving asset quality and stable deposit franchise.
The street now waits to see whether management can lift domestic margins back above 3% in FY27 while sustaining double-digit credit growth and keeping bad loan ratios under control.
Disclaimer: Investment analysis and target prices mentioned above are based on specific brokerage reports and do not constitute personal financial advice. Users should note that equity investments are subject to market risks, and past performance is not a guarantee of future returns. We recommend consulting a SEBI-registered investment advisor before making any buy, sell, or hold decisions based on these projections.
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