Buy State Bank of India; target of Rs 960: Prabhudas Lilladher

Prabhudas Lilladher's research report on State Bank of India

SBI saw a decent quarter as core PPoP beat PLe by ~4%. NII/NIM was a miss due to lower NIM that was offset by better opex/fees. Asset quality remains strong as net slippages were 20bps lower at 49bps despite Q1 generally seeing more stress. Bank is not seeing delinquencies in SME/unsecured. Loan growth was a bit muted at 0.8% QoQ due to de-growth in corporate that was led by higher prepayments and intense competition. Xpress growth although slower, is guided to pick up. We are factoring a 12.5% CAGR in credit over FY25-27E. NIM would see further pressure in Q2FY26 but may bottom out and pick-up from Q3FY26. While most banks surprised negatively on core earnings for Q1FY26, SBI delivered superior results.

Outlook

Stock is trading at 1.0x on Mar’27 core ABV; we keep multiple at 1.3x and SOTP-based TP at Rs960. Retain ‘BUY’.