SBI share price drops 2% post Q4 results; check stock analysis, outlook

SBI share price today: HSBC believes SBI may face strong margin headwinds ahead as the Reserve Bank of India (RBI) eases monetary policy further

SBI share price today: Analysts have cut earnings estimates for State Bank of India (SBI), factoring in margin pressure ahead. The development triggered marginal selling in SBI shares today, which fell 2 per cent to ₹783.65 per share, in the intraday trade.

 

By comparison, the BSE Sensex index was up 0.53 per cent at 10:30 AM.  Catch Stock Market LIVE Updates Today Here

 

Analysts at global brokerage HSBC believe SBI may face strong margin headwinds ahead as the Reserve Bank of India (RBI) eases monetary policy further.

 

"Despite having relatively lower exposure to repo-linked loans, its sticky savings account rates, long duration of term deposits (18 months), and higher share of corporate loans would impact its net interest margin (NIM), which can compress by ~20-25bp year-on-year (Y-o-Y) in financial year 2025-26 (FY26)," they said.  

 

The brokerage added that lower NIM could keep the bank’s return on assets (RoA) under pressure by around 10-15 basis points (bps) Y-o-Y in FY26 and earnings per share (EPS) growth muted. 

ALSO READ: Will ensure RoA over 1% in FY26 despite margin pressure: SBI Chairman

 

"The current valuation for the core bank (1.1x FY27 standalone book value per share) with a modest EPS growth outlook limits any re-rating potential," HSBC said with a 'Hold' rating and a lower target price of ₹820 (from ₹850).

 

In the March 2025 quarter of the previous financial year (Q4FY25), SBI's NIM compressed 1bp sequentially to 3 per cent even as domestic NIM was stable at 3.15 per cent.

 

The management, however, has guided to maintain NIM around 3 per cent on a full-year basis with some quarterly variations.

 

"In our view, SBI's profitability will remain under pressure in FY26 given pressure on margins, normalisation of credit costs, and higher cost to income ratio," concurred those at JM Financial Institutional Securities.

 

SBI Q4 results

During the March quarter, State Bank of India reported a Q4 net profit of ₹18,642 crore, down 9.9 per cent Y-o-Y. The bank's robust treasury income of around ₹6,880 crore offset higher-than-expected opex of ₹35,700 crore (up 18 per cent Y-o-Y) and provisions of ₹6,440 crore (up 300 per cent Y-o-Y).

 

The bank's net interest income (NII) increased around 3 per cent on year to ₹42,774 crore amid a 12 per cent Y-o-Y / 4 per cent Q-o-Q growth in loan book, and 9 per cent Y-o-Y / 3 per cent Q-o-Q rise in deposit base. 

 

Its current account-savings account (CASA) ratio increased 77bps Q-o-Q to roughly 40 per cent.

 

"Factoring in some growth slowdown and margin contraction, we cut FY26-27 earnings estimates by 4-5 per cent and SBI’s share price target to ₹975 from ₹1,025, valuing the standalone bank at 1.2x FY27E ABV," said analysts at Emkay Global Financial Services.

 

Motilal Oswal Financial Services, too, has trimmed its earnings estimated for FY26 by 4.6 per cent and FY27 by 5 per cent, due to likely lower NIM and higher provisions. The brokerage, however, expects SBI to maintain its FY27 RoA and RoE at 1 per cent and 16.1 per cent, respectively.

 

HDFC Securities has slashed SBI's net profit estimates by nearly 7 per cent each for FY26 and FY27.

 

Not all are worried

That said, a section of analysts rallies behind SBI, arguing that the public sector bank remains well-poised to sustain its growth momentum, supported by its comfortable loan-deposit ratio (LDR).

 

With a bulk of its loan book either being Marginal Cost of Funds-based Lending Rate (MCLR)-linked or Fixed rate, analysts believe the impact of yield repricing would be with a lag. This, in turn, may aid the management to protect NIM at 3 per cent in FY26.

 

"SBI reported a consistent and resilient performance in Q4 and FY25, driven by strong asset quality, stable margins, and a robust digital ecosystem. Growth was broad-based across key segments, with healthy traction in retail and agriculture. Despite some moderation in corporate lending, a strong pipeline positions the company for continued credit expansion," noted analysts at Deven Choksey Research.

 

The brokerage has revised the stocks adjusted book value (ABV) estimates for FY26 and FY27, valuing SBI's core banking operations at 1.5x FY27E ABV. 

 ALSO READ: Will ensure RoA over 1% in FY26 despite margin pressure: SBI Chairman