Jefferies shares "buy" call for SBI, sees 21% potential upside on healthy outlook

Brokerages bet on SBI's bounce-back with robust credit growth and stable asset quality

Global brokerage firm Jefferies issued a “buy” recommendation on State Bank of India (SBI), assigning a target price of Rs 960 per share, implying a potential upside of 22 percent.

According to the firm’s analysts, although economic activity in the first quarter was relatively subdued, the outlook is expected to improve by the second and third quarters, aided by the Reserve Bank of India’s monetary relief measures and the impact of tax cuts.

Jefferies projects a credit growth of 12 percent and deposit growth of 10 percent for the public sector lender, supported by adequate liquidity buffers. The bank is also expected to maintain a return on assets (RoA) of 1 percent despite facing near-term pressure on net interest margins (NIM) due to anticipated rate cuts.

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In the final quarter of Fiscal Year 2025, SBI reported a decline in net profit, although net interest income (NII) registered a modest increase. Specifically, net profit dropped 10 percent compared to the same period last year, while NII rose by 2.7 percent to Rs 42,775 crore.

On the positive side, SBI’s asset quality showed sequential improvement. The gross non-performing assets (GNPA) ratio declined to 1.82 percent in the January–March quarter from 2.07 percent in the preceding quarter. The net NPA ratio also improved to 0.47 percent from 0.53 percent.

Geojit Financial Services also turned more optimistic, upgrading SBI to a “buy” from “hold” with a revised target price of Rs 888 per share. The firm expects credit growth to remain strong and resilient, even in a softening interest rate environment, and sees the bank sustaining healthy return on equity and return on assets.

Among the 42 brokerages tracking SBI, 34 maintain a “buy” rating, 7 suggest “hold,” and only 1 recommends “sell.”

Despite the bullish stance from analysts, shares of SBI have declined by 1.5 percent over the past month, even as the benchmark Nifty 50 index rose by 0.4 percent in the same period.

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