State Bank of India (SBI) posted a strong set of numbers for the first quarter of the financial year 2025–26 (Q1FY26), with standalone net profit rising 12% year-on-year (YoY) to ₹19,160 crore, surpassing market estimates. The lender attributed the growth to operating efficiency and controlled expenses, despite a marginal decline in margins.

The profit figure came in well above the consensus estimate of ₹17,095 crore and last year’s ₹17,035 crore. Interest income for the quarter grew 6% YoY to ₹1,17,996 crore from ₹1,11,526 crore, while interest expenses increased at a faster pace of 9% to ₹76,923 crore. Stock Market Reaction SBI shares opened higher on Monday, gaining more than 2% in early trade after the results were announced during market hours on Friday.

The stock opened at ₹807, up from the previous close of ₹804.55, and touched an intraday high of ₹822.85 in morning deals. However, weak overall market sentiment led to some profit booking, with the stock closing over 1% lower on the NSE by the end of the day. Market participants noted that the early rally reflected investor optimism over the better-than-expected earnings, before broader market weakness weighed on sentiment.

Operational Performance

According to brokerage Motilal Oswal Financial Services (MOFSL), the net profit exceeded its estimates by 13%, aided by strong treasury gains and well-managed operating costs.

However, the bank’s net interest income (NII) declined 4% sequentially, while the net interest margin (NIM) slipped 10 basis points quarter-on-quarter and 32 basis points YoY to 2.9%. SBI’s management expects domestic NIMs to remain above 3% for FY26, with a recovery anticipated from the third quarter. Credit growth stood at 12% YoY, with the unsecured Xpress Credit book remaining flat. A strong credit pipeline, coupled with a comfortable domestic credit-deposit ratio, is expected to support incremental lending in the coming quarters. MOFSL has raised its earnings estimates by 3% for FY26 and 3.5% for FY27, reiterating a buy rating with a target price of ₹925.

Brokerage Reactions
 

Other brokerages shared similar optimism. Nuvama maintained a buy rating with a target price of ₹950, citing the bank’s strong fundamentals, expectations of improved liquidity, moderation in deposit costs, and benefits from recent capital raising. JM Financial also retained its buy call with the same target, highlighting anticipated improvement in liquidity conditions and deposit cost pressures easing in the second half of the year. Nirmal Bang Institutional Equities expressed confidence in SBI’s long-term prospects, pointing to its leadership in both corporate and retail segments, which enables selective, high-quality credit growth. The brokerage emphasised the bank’s ample liquidity position, which supports stable margins, and its “pristine” asset quality, with a standard provision buffer of 0.7% providing additional comfort against potential credit shocks. “Our target multiple is set at a 6% discount to the five-year average multiple of 1.38x,” Nirmal Bang stated, adding, “We remain positive on SBI for the long term given its strong franchise, ability to choose the best quality credit, and robust balance sheet.”

Outlook

Analysts broadly expect SBI to sustain its growth momentum through FY26, supported by steady loan demand, healthy asset quality, and operational efficiency gains. While the short-term margin compression is a concern, most brokerages believe the impact will be offset by easing funding costs in the second half of the year. The bank’s recent capital raising is also seen as a strategic positive, strengthening its balance sheet and providing headroom for growth across priority segments. In the near term, SBI’s performance will likely hinge on its ability to manage deposit costs, maintain asset quality in a higher interest rate environment, and capitalise on corporate lending opportunities. The third quarter is expected to mark a turning point for margins, with liquidity improvements and seasonal credit demand offering tailwinds.

Despite Monday’s intraday volatility, market experts note that the stock remains a core holding for long-term investors seeking exposure to India’s banking sector. With consensus target prices in the ₹925–₹950 range, the Street is betting on SBI’s scale, resilience, and execution capabilities to deliver consistent returns in the coming quarters.