SBI shares jump 3% after Citi's double upgrade to 'buy'

SBI shares have underperformed the Nifty in the last one year.

Shares of state-lender State Bank of India bucked the weak market trend and surged 3 percent as investors cheered a 'double-upgrade' on the stock initiated by global brokerage Citi.

Citi double-upgraded State Bank of India to a 'buy' from its previous 'sell' call. Along side that, the brokerage also raised its price target by over 15 percent to Rs 830. The revised price target implies a potential upside of close to 20 percent from Monday's closing levels.

At 11.01 am, shares of SBI were trading at Rs 715 on the NSE, sitting on top of the list of gainers on the Nifty.

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SBI has implemented several liability-cost optimisation measures and yield levers, with management reaffirming its guidance for Net Interest Margins (NIMs) to stay above 3 percent, Citi noted in its report. The brokerage expects NIMs to range between 2.9 percent and 3 percent over FY25-27.

Citi highlighted that unsecured retail slippages are contained at 0.5 percent, while the SME-2 pool remains under control. Credit costs are also expected to stay below 50 basis points. Additionally, the restoration of risk-weights on NBFC lending is projected to enhance SBI’s CET-1 ratio by 25-30 basis points. However, weak market sentiment and the looming possibility of an equity fundraise present near-term challenges.

Factoring in a 13-14 percent loan growth and controlled credit costs, Citi has also raised its earnings estimates for SBI by 1-2 percent for FY26-27.