 "SBI, State Bank Of India")
Brokerages on SBI Q1 results: State Bank of India (SBI) kicked off FY26 on a solid note, with its April-June quarter profit beating estimates despite margin compression, thanks to hefty treasury gains and disciplined cost control. Most brokerages remain bullish on the country’s largest lender, citing attractive valuations, resilient asset quality and the prospect of a margin rebound in the second half of the year.
On the bourses, SBI share price rose as much as 1.76 per cent to an intraday high of ₹818.75 per share. Around 9:30 AM, SBI share was trading 1.61 per cent higher at ₹817.50 per share. In comparison, BSE Sensex was trading 0.22 per cent higher at 80,030.05 levels.
The bank posted a net profit of ₹19,160 crore for Q1FY26, up 12.5 per cent year-on-year (Y-o-Y) and 2.8 per cent sequentially, comfortably ahead of most Street estimates. Gains from the investment book – up 144 per cent Y-o-Y to ₹6,326 crore – alongside a sharp jump in forex income, helped offset weaker core interest income.
Net interest income (NII) was broadly flat at ₹41,072 crore, as the domestic net interest margin (NIM) slipped to 3.02 per cent from 3.35 per cent a year ago and 3.15 per cent in Q4FY25.
Chairman C S Setty acknowledged the pressure on margins, attributing it to the repricing of term deposits and customers locking in high rates. He expects relief from September onwards as deposit costs peak and the cash reserve ratio cut takes effect, guiding for NIM to return to Q4FY25’s 3.22 per cent level by the end of FY26.
Loan growth stayed healthy at 11.6 per cent Y-o-Y, led by a 15 per cent jump in home loans and double-digit expansion in retail credit. Corporate loans grew just 5.7 per cent, with many large borrowers tapping the commercial paper market for cheaper funding. Deposits rose 11.7 per cent, though the CASA ratio dipped to 39.36 per cent from 40.7 per cent a year earlier.
Asset quality remained steady: the gross NPA ratio fell 38 basis points Y-o-Y to 1.83 per cent, while the net NPA ratio held at 0.47 per cent. The provision coverage ratio was a robust 91.7 per cent. The bank’s capital adequacy ratio stood at 14.63 per cent in June and will rise to 15.33 per cent post its recent ₹25,000 crore equity raise. Check List of Q1 results today
Street reaction on SBI Q1 results
Brokerages largely agreed that Q1 demonstrated SBI’s ability to deliver stable core performance despite sector-wide NIM headwinds. JM Financial called the quarter “steady,” noting that profit was about 15 per cent ahead of its estimates, driven by stronger-than-expected PPOP growth and benign credit costs. It retained a ‘Buy’ rating with a target price of ₹950, expecting average RoA/RoE of 1 per cent/14 per cent over FY26–27.
Nuvama highlighted SBI’s relatively modest NIM drop – 10 bps versus steeper declines for peers – and said core NIM was down just 2 bps, the smallest fall in the sector. With a CET-1 ratio of 12.3 per cent after the capital raise, it sees the bank well-positioned for growth and kept its ‘Buy’ call with a ₹950 target.
Motilal Oswal also noted the earnings beat, aided by controlled operating expenses, and nudged up FY26/27 earnings estimates by 3–3.5 per cent. It values SBI at 1.2x FY27 adjusted book and maintains a ₹925 target with a ‘Buy’ rating.
Antique, while trimming growth forecasts slightly due to muted system-wide credit expansion, retained its ‘Buy’ rating with a ₹955 target, pointing to attractive valuations given projected FY26-28 average RoA/RoE of 1 per cent/15 per cent, according to reports.
Avendus, meanwhile, reportedly upgraded the stock to ‘Buy’ from ‘Add,’ lifting its target to ₹938 on expectations of faster-than-system loan growth and operating levers to offset NIM compression.
SBI outlook
Analysts broadly expect NIM pressure to persist in Q2FY26 as deposit repricing continues, before easing in the second half. SBI’s 12 per cent loan growth guidance for FY26 remains intact, with management planning to accelerate personal loan disbursements during the festive season.
Asset quality is forecast to stay resilient, with slippages contained below 0.6-0.7 per cent and credit costs under control.
At 0.9–1.2x FY27E adjusted book value, SBI trades at a discount to historical averages, giving brokerages confidence that the risk-reward remains favourable.
That said, with capital buffers strengthened, balance sheet quality intact, and a likely pick-up in margins later in the year, the Street sees India’s largest lender well-placed to sail through the current interest rate cycle and deliver steady shareholder returns.
