State Bank of India
Cheapest large bank; funding moat
- Last close
- ₹964.70
- 29 Sept 2026 · reference
- 1D · 1M
- +0.3% · −7.9%
- price-only
- Weight
- 4.0%
- 31 Jul 2026 · Aug rank 3
- Thesis review
- 8 Sep 2026
- Why We Own, p29
Approved description
India's largest bank: ₹50 lakh crore of loans, ₹60 lakh crore of deposits, 23,000 branches, a 22–23% share of system deposits and a 39% CASA ratio no private bank can match. Since the 2016–19 asset-quality review it has rebuilt from a ₹6,500 crore loss (FY18) to an ₹80,000 crore profit (FY26), with net NPA down from 5.7% at the FY18 peak to 0.4%. Listed subsidiaries — SBI Life, SBI Cards, SBI Funds (AMC), SBI General, SBI Caps — are worth ~₹240 a share today (₹270 on a Sep-2027 basis) after a 20% holding-company discount.
- 01Cheapest large bank in India: 1.25x core (ex-subsidiaries) book for a 15–16% ROE, against our 1.5x fair P/B; base-case target ₹1,292 (+28%), probability-weighted ₹1,262 (+25%), BUY.
- 02Funding is the moat: 39% CASA, the lowest cost of deposits among large banks, ₹3 lakh crore of excess SLR and a domestic loan-to-deposit ratio of 74% — SBI can grow loans 15% for three years without chasing deposits, which no private bank can say.
- 03Asset quality has structurally reset: retail is 35% of the book, led by salaried/government employees (the 'Xpress credit' franchise) and the largest home-loan book in the country; GNPA 1.47%, PCR 74%, credit cost 40 bp — we model it rising to 60 bp and the stock is still cheap.
- 04Capital is adequate and self-funded: CET1 12.9% after the FY26 QIP; a ~15.8% ROE on an 11% normalised CET1 base funds 13–14% growth internally and still pays ₹18+ of dividend.
- 05House history: the house entered SBI in 2017 because retail delinquencies were better than perceived; the July file shows it at 4.0% as a Core holding. Our three-page note (Section B) sets out the full model.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Total Income | 1,80,062 | +7.8% | −0.6% |
| Interest Earned | 1,36,240 | +8.5% | +3.9% |
| PPOP | 38,632 | +12.0% | +29.9% |
| Net Profit | 24,113 | +13.7% | +22.8% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
Bank preset: NII, PPOP, provisions, NIM, GNPA, CASA, ROA/ROE; P/B. Industrial leverage ratios suppressed.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Approved model
base TP ₹1,292 (+28%) (price basis 7–8 Sep 2026; internal, not for clients)
What we watch
- 2QFY27 (Nov-26): domestic NIM holding at 3%+ and loan growth at the 14–15% guidance.
- Subsidiary value events: SBI Funds IPO, SBI General stake sale, further YES Bank/other stake monetisation.
- FPI flows returning to Indian financials; SBI is the most liquid large-cap bank under-owned by foreigners.
- Government ownership (~55%): directed lending, dividend policy and management tenure are policy variables; the ROA ceiling (~1.1%) is structurally below private peers.
- NIM: a 2.6–2.7% margin (model basis) is thin; a 20 bp compression on further rate cuts before deposits reprice cuts FY27E EPS ~10%.
- Corporate cycle: SBI's corporate book (28% of loans, plus 15% international) is the system's largest; a credit-cost reversion to 80–100 bp would take ROE to 12%.