Leading PSU lender State Bank of India (SBI) may be sitting on a Rs 3.5 lakh crore goldmine, and it’s not in its core lending book. With the Finance Ministry nudging public sector banks to monetise their non-core assets, the spotlight is back on SBI’s powerful but under-appreciated subsidiary portfolio. Analysts believe this hidden value - spread across mutual funds, insurance and payments - could unlock fresh upside for India's largest lender.
For a bank that clocks over Rs 70,000 crore in annual profit, the growth story is evolving. It’s no longer just about net interest margins or slippages. It’s now about how the market values the sum of SBI’s parts, especially the unlisted ones that have matured into cash-generating businesses. If SBI moves ahead with IPOs, starting with SBI Mutual Fund, it could mark a valuation inflection point, with significant re-rating potential.
“SBI’s subsidiaries contribute nearly Rs 3.5 lakh crore to its SOTP value-based on market cap and AUM benchmarks. Stripping out overvaluation and applying a holding company discount, we estimate a realisable value of around Rs 2.5 lakh crore,” said Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital.
That would be roughly one-third of SBI’s current market capitalisation of Rs 7.1 lakh crore.
The Value of the Parts
The unlisted arms - SBI Mutual Fund, SBI General Insurance, and SBI Capital Markets - together account for a meaningful chunk of SBI’s embedded value. According to the FY25 annual report, the PBT contribution from subsidiaries and associates stood at Rs 14,217 crore, up 15 percent on-year.
Among these, SBI Mutual Fund is the most mature, with over Rs 11 lakh crore in AUM, making it India’s largest asset manager. SBI owns 63 percent of the AMC, with the remainder held by France’s Amundi. Analysts believe the mutual fund business alone could command a valuation of Rs 60,000–75,000 crore upon listing, implying SBI’s stake may be worth Rs 37,000-47,000 crore, not far behind listed peers like HDFC AMC.
Given that HDFC AMC trades at ~8x book and 25x earnings, SBI MF - with its massive SIP book and operating efficiency - could fetch similar or higher multiples.
“The IPO of SBI Mutual Fund is likely to be the next significant monetisation event, unlocking substantial value,” said a recent note by Motilal Oswal.
SBI General Insurance and SBI Payment Services, though smaller, are also seen as promising.
SBI holds a 70 percent stake in SBI General Insurance, which is already among the top five private players by gross premiums. The last fiscal year saw SBI General posting over Rs 500 crore in net profit. A potential IPO here could fetch a valuation of Rs 10,000-12,000 crore, again adding incremental visibility to the SOTP.
SBI also owns controlling stakes in other profitable but low-profile entities like SBI Capital Markets, SBI DFHI, SBI Payments, and SBI Global Factors. These companies contribute over Rs 1,000 crore in aggregate profits, according to brokerage estimates. The FY25 annual report pegs the total pre-tax profit of subsidiaries and associates at Rs 14,217 crore (up 15 percent year-on-year), with SBI Life accounting for nearly a third of that.
SBI Payments has a dominant UPI/merchant acquiring footprint, though governance issues linked to Hitachi’s 26 percent stake need resolution before an IPO can be explored.
“We continue to value the core bank at 1.2x FY27E adjusted book value, with subsidiaries contributing Rs 241 per share to our SOTP-based target price of Rs 960,” said JM Financial in a recent note.
Motilal Oswal pegs the value of SBI’s subsidiaries even higher — at Rs 245 per share — and sees them as the key re-rating trigger.
“We maintain SBI as our top ‘Buy’ idea among PSU banks with a target price of Rs 925, premised on 1.2x FY27E ABV plus Rs 245 for subsidiaries,” the brokerage said.
Nirmal Bang has gone a step further and values the subsidiaries at Rs 252.3 per share in its SOTP, which translates into a target price of Rs 1,013.
While SBI Life and SBI Cards are already listed, their market cap contributions are often undervalued in SBI’s share price due to holding company discounts. SBI Life, for instance, has a market capitalisation of over Rs 1.2 lakh crore, of which SBI’s 56 percent stake is worth nearly Rs 67,000 crore. Yet the bank’s own market cap (~Rs 7.1 lakh crore) reflects only a partial mark-to-market of these assets — largely due to conglomerate discount.
Downside Protection
The IPO of SBI MF, expected in FY26, could become a turning point. Beyond the cash inflow, it would offer price discovery, enhance transparency, and allow the market to ascribe cleaner valuations to other subsidiaries.
As Sharekhan said, even if core profitability comes under some pressure in FY26 due to narrowing NIMs, SBI remains well-positioned to sustain RoA around one percent and RoE above 14 percent, with ample headroom to monetise investments.
SBI’s CET-1 ratio of 10.8 percent, according to JPMorgan, is an indication that these monetisations would be opportunistic and not driven by capital stress — which is key to investor confidence.
“With such strong embedded value, SBI has multiple levers — to improve capital ratios, support credit growth, or unlock shareholder wealth,” said a private equity investor. Besides, investor appetite is healthy for themes like insurance and digital payments, but size and sustainability matter, said Nirav Karkera, Head of Research at Fisdom. “SBI has the balance sheet strength and brand pull — now it needs to time the listings right,” he added.
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