Buy State Bank of India; target of Rs 1100 Prabhudas Lilladher

Prabhudas Lilladher's research report on State Bank of India

SBI saw a strong quarter as core PAT beat PLe by 14% since NII/NIM and core fees surprised positively. Despite estimate of NIM fall, reported NIM increased by 7bps QoQ to 3.09% led by decline in deposit cost partly driven by increase in daily average CASA. Core fees were more due to rise in interchange fees, part of which may be sustainable. Loan growth was a bit better at 3.9% QoQ that was broad based. While we have factored in 13% YoY growth for FY26, there is adequate liquidity to fund higher growth, as LCR is healthy 143%. Asset quality continues to remain benign as net slippage was 9bps lower at 26bps. Earnings quality remains one of the best owing to profitability and RoRWA focused credit growth.

Outlook

Due to higher NII/fees we raise FY26/27E core PAT by avg. 6% We keep multiple at 1.3x but increase SOTP-based TP to Rs1,100 from Rs960 as we roll forward to Sep’27 core ABV. Retain ‘BUY’.