Buy State Bank of India; target of Rs 1150 : ICICI Securities

ICICI Securities's research report on State Bank of India

State Bank of India (SBI) reported yet another strong quarter with Q2FY26 PAT of INR 201.6bn, aided by the Yes Bank stake sale along with superior loan / core fee growth, NIM and comfortable asset quality. Reported RoA was 1.17%; ex-stake sale, RoA was also steady at 1%. Loan growth (13% YoY/4% QoQ) remains comfortably above industry average and broad-based. SME segment registered >15% YoY growth for the 11th straight quarter, while overall retail/housing loan grew 14%/15% YoY despite their massive size. NIM improved 7bps QoQ to 2.97% led by better liability management. While non-staff opex was slightly higher, SBI also saw strong fee income growth (up 25% YoY). Gross slippages eased, both on QoQ and YoY basis, while net NPA sustained its improving trajectory.

Outlook

Retain BUY; TP revised to INR 1,150 based on ~1.5x FY27E ABV Xpress credit segment, too, after a couple of quarters, saw an improvement in GNPA ratio. CET 1 stands comfortable at 11.47%.