Top Stock Pick For 2025 - 'Buy' SBI For An Upside Of 27% Says Motilal Oswal; Here's Why

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Motilal Oswal Report

State Bank of India has delivered a robust set of performance in recent years, propelled by steady business and revenue growth as well as controlled provisions. Net interest margin has contracted in recent quarters, and the management has guided for broadly stable margins going forward.

This is because the bank has levers in place (Credit-Deposit ratio, MCLR re-pricing, et al.) to mitigate the impact of the rising cost of deposits. SBI’s asset quality remains healthy with consistent improvements in headline asset quality ratios, while the restructured book remains under control at 0.4% of loans.

We estimate credit costs to remain in check at ~50 bp, enabling a 12% earnings CAGR over FY24-27. We, thus, estimate SBI to deliver RoA/RoE of ~1.1%/17.3% in FY27.

SBI remains our preferred Buy in the sector with a target price of Rs 950 (premised on 1.2x FY27E adjusted book value).

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