SBI shares: Lower provisions lift Q3 profit; targets for PSU bank hint at upside

State Bank of India reported a mixed set of quarterly results, as lower provisions drove profitability but margin moderated and other income missed analyst estimates due to lower treasury income. This led brokerages to slightly trim their target prices on the PSU banking counter.

To be sure, the Q3 credit growth was healthy but the unsecured book (Xpress Credit) saw muted growth. Deposit growth was modest, while CASA growth remained under pressure, MOFSL noted.

"Fresh slippages and credit costs were contained, which underscores improvements in underwriting standards. Restructured book was well under control at 0.34 per cent of advances and the SMA pool was high due to one long-term government sector customer of the bank. We cut our earnings estimates by 1.7-3.4 per cent for FY26-FY27 and expect FY27 RoA/RoE of 1.05 per cent/16.8 per cent, the domestic brokerage said.

It suggested a 'Buy' on the stock with a target of Rs 925.

HDFC Institutional Equities said SBI's Q3FY25 earnings missed its estimates, owing to lower treasury or MTM gains and softer margins, offset by strong operational performance and reversal of standard asset provisions.

Loan growth at 13.8 per cent YoY was healthy across all segments, while the growth in Xpress credit portfolio decelerated further, it said.

"Deposit growth was marginally soft as the CASA ratio dropped further to 37.6 per cent due to weaker traction in SA balances. Asset quality improved further, as reflected in sequentially lower slippages, reduction in SMA balances, and write-back of provisions," it said while retaining its 'Buy' and a target price of Rs 1050 on the stock.

On Thursday, SBI shares settled at Rs 752.35 on BSE, down 1.79 per cent.

Nirmal Bang Institutional Equities said it values SBI’s standalone business at 1.4 times December 2026E ABV. Adding subsidiary value per share of Rs 248.90, it derived a target price of Rs 1,016 against Rs 1,055 earlier.

"Our target multiple is at a 5 per cent premium to the past 5-year average multiple of 1.3 times ABV. We are positive on SBI for the long-term considering the bank’s leadership position in Corporate and Retail and pristine asset quality," Nirmal Bang said.

SBI expects net interest margin (NIM) to remain above 3 per cent. It has guided for overall deposit growth of 10 per cent YoY.

"The management is confident of loan growth coming in at 14–16 per cent for FY25E, a rebound in Xpress credit, double-digit deposit growth, a stable NIM and an RoA of at least 1 per cent. We are tweaking earnings and target price, which is now Rs 950/1.1x BV (earlier Rs 1,026); maintain ‘BUY’," it said.