SBI Shares Can Zoom 25% Says Nirmal Bang Post Q2 Results — Here's Why

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Nirmal Bang Report

State Bank of India’s Q2 FY26 performance at net interest income/pre-provision operating profit/PAT level was at a variation of 4.9%/-20.5%/-3% vs. our estimates. PAT rose by 10% YoY and 5.2% QoQ to Rs 201.5 billion, aided by one-off gains from the Yes Bank stake sale amounting to Rs 45.93 billion (gross of tax)/ Rs 33.86 billion (net of tax), along with a sequential NIM expansion of 7 bps to 2.97%.

Loan book grew by 13.1% YoY on the back of 18.8%, 14.2%, 14.1%, 7.1% and 15% YoY growth in SME, agriculture, retail, corporate and overseas advances respectively.

Deposits grew by 9.3% YoY. GNPA / NNPA improved QoQ by 10 bps/5 bps to 1.73%/0.42%.

We have estimated loan / earnings CAGR of 12.3% / 12.1% over FY25- FY28E which will lead to RoA / RoE of 1.1% / 15.3% in FY28E. We have valued SBI’s standalone business at 1.5x Sept 2027E ABV (as against 1.3x Sept 2027E earlier).

Adding subsidiary value per share of Rs 239.4, we derive our target price of Rs 1,195 (as against Rs 1,040 earlier).

Our target multiple is at 4.9% premium to five-year average multiple of 1.43x.

We are positive on SBI for the long-term considering the bank’s leadership position in Corporate and Retail (which enables it to choose the best quality credit), ample liquidity on balance sheet (providing stability to its margins) and pristine asset quality (standard provision buffer of 0.7% provides added comfort). Maintain ‘Buy’.

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