State Bank of India (SBI) shares experienced their fifth consecutive session of declines on Tuesday, with the public sector banking giant's stock falling over 1% during intraday trading. The counter was observed trading at Rs 943.45 apiece on the BSE, a notable drop from its previous close of Rs 954. Over the last five trading sessions, SBI's scrip has collectively shed nearly 3% of its value.
Analysts Maintain 'Buy' Rating Despite Recent Dip
Despite the recent downward trend, brokerage firm Motilal Oswal Financial Services (MOFSL) has reiterated its bullish stance on State Bank of India. In its latest annual report update, MOFSL maintained a 'Buy' recommendation for the banking counter, emphasizing the lender's inherent structural strengths and leadership position in the market.
Significant Upside Potential Projected
MOFSL has set an ambitious share price target of Rs 1,300 for SBI, suggesting a substantial upside potential of approximately 37% from the current trading levels of Rs 943. The brokerage's valuation methodology includes valuing the core banking business at 1.4x FY28E Adjusted Book Value (ABV) and adding an additional Rs 352 per share for its various institutional subsidiaries.
The firm's analysis of SBI's FY26 annual report highlights the bank's consistent efforts in strengthening its balance sheet and delivering healthy Return on Equity (RoE). MOFSL projects SBI's margins to sustain successfully at 2.8% over FY27. Furthermore, supported by low provision costs and robust domestic visibility, the brokerage anticipates an 8% earnings Compound Annual Growth Rate (CAGR) for SBI over the FY26-28 period.
Improved Asset Quality and Future Outlook
A key positive indicator cited by MOFSL is the significant reduction in the concentration of Non-Performing Assets (NPAs). "The top 20 NPA concentration has reduced drastically to 11.8% as of Mar-26 from 29.1% on Mar-25, reflecting improved corporate health and granularity in underwriting," stated MOFSL in its report. This improvement in asset quality underpins the brokerage's optimistic outlook.
Looking ahead, MOFSL expects SBI to deliver solid financial metrics, projecting a Return on Asset (RoA) of 1% and a Return on Equity (RoE) of 15.5% by FY28. These projections underscore the belief that despite short-term market fluctuations, SBI's fundamental strengths and strategic improvements position it for sustained growth.
Disclaimer: This article provides market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.