SBI share price target: Jefferies, Motilal, others see up to 34% upside in state lender. Buy, sell or hold?

ETMarkets.com

The growth was supported by an expansion in the bank's loan book, which crossed Rs 52 lakh crore during the quarter. Operating profit rose 7% YoY to Rs 34,226 crore from Rs 31,904 crore. Interest income increased 10% to Rs 1.32 lakh crore, while interest expenses grew at a slower pace of 8% to Rs 82,876 crore.

Should you buy SBI shares?

Jefferies has maintained its Buy rating on State Bank of India (SBI), with a target price of Rs 1,320 per share, implying an upside potential of 34%.

The brokerage said the bank's asset quality remains strong, with gross slippages at 0.5% of loans from the past year, although the metric is not directly comparable with peers. Credit cost stood at 0.2% of average loans, while the gross non-performing loan (NPL) ratio was 1.4%. The specific coverage ratio remained stable at 74%.

Management expects the transition to the expected credit loss (ECL) framework to result in a one-time impact of Rs 1,950 crore, net of tax and provisions, which will be adjusted through reserves. The impact will be spread over five years for capital adequacy calculations. However, clarity is still awaited on the annual profit and loss impact and the effect of the transition on held-to-maturity (HTM) investments.

Jefferies has raised its FY27-FY29 estimates by 1-2% to factor in the latest results and interest rate hikes. The brokerage expects core profit to grow at a compound annual growth rate (CAGR) of 14% over FY26-FY29, with RoA and RoE projected at 1% and 15%, respectively, in FY28.

SBI's CET-1 capital adequacy ratio (CAR) of 13%, healthy returns on equity and the potential to monetise stakes in its businesses are expected to support growth. Jefferies continues to count SBI among its top picks in the banking sector and has retained its Buy rating with a target price of Rs 1,320, valuing the bank at 1.5 times its estimated December 2028 adjusted price-to-book value.

Motilal Oswal has maintained its Buy rating on State Bank of India (SBI), with a revised target price of Rs 1,225, implying an upside potential of 26%.

SBI delivered a steady quarter, driven by healthy net interest income (NII) growth, while earnings also benefited from one-off gains arising from the sale of its stake in SBI Mutual Fund. Net interest margin (NIM) expanded 8 basis points quarter-on-quarter, supported by improved yields following the deployment of surplus FCNR(B) liquidity towards the retirement of high-cost liabilities.

The bank reiterated its domestic NIM guidance of above 3% for FY27, backed by improving yields, expectations of a rate hike and a healthy credit growth outlook. Motilal Oswal has fine-tuned its earnings estimates for FY27 and FY28 and projects a return on assets (RoA) of 1.03% and return on equity (RoE) of 15.2% for FY28. The brokerage has reiterated its Buy rating with a revised target price of Rs 1,225, valuing the bank at 1.3 times its estimated March 2028 adjusted book value (ABV), along with Rs 281 for subsidiaries.

Emkay Global Financial Services sees a 39% upside in State Bank of India (SBI), retaining its Buy rating with a target price of Rs 1,350 per share.

The brokerage said NIM expansion was driven by lower deposit costs, supported by the replacement of high-cost wholesale deposits through FCNR(B)-led funding and an improvement in the CASA balance. Management expects further gains from the lagged repricing of EBLR and MCLR-linked loans, while maintaining its domestic NIM guidance of above 3%.

Management estimates the net-of-tax impact of the expected credit loss (ECL) framework at around Rs 19,500 crore. Additionally, agricultural loans worth around Rs 10,000 crore across three drought-affected states may qualify for restructuring.

Emkay expects SBI to deliver a return on assets (RoA) of around 1.1% and return on equity (RoE) of approximately 16% over FY27-FY29E. The brokerage has fine-tuned its estimates but continues to expect healthy, broad-based growth, supporting normalised RoA and RoE of around 1.1% and 16%, respectively.

Emkay has reiterated its Buy rating with a target price of Rs 1,350, valuing the bank at 1.4 times its estimated September 2028 adjusted book value (ABV), while assigning Rs 318 per share to its subsidiaries and investments.

The key risks to its outlook include a macroeconomic slowdown that could hurt growth and asset quality, along with higher treasury losses.