State Bank of India, the country’s largest lender, is on track for one of its strongest years in recent memory. The stock has gained 25 per cent so far in 2025, comfortably outpacing every private-sector peer within the Nifty. The performance marks a clear shift in momentum for the bank: after a muted 5 per cent rise in 2023 and a more respectable 23 per cent climb in 2024, this year’s advance positions SBI for a fifth straight year of positive returns and its most impressive showing in two years.SBI’s appeal extends well beyond its scale. As the anchor of India’s banking system and a long-standing favourite among institutional and long-term investors, the lender is entering a phase where stabilising credit growth, evolving rate expectations and sustained improvements in asset quality are creating a more durable pathway for earnings. Against this backdrop, analysts believe that targets of ₹1,100 and above are increasingly achievable, underscoring the bank’s strengthening position in the broader financial landscape.
What’s fueling the growth?
Demand remains healthy, and the recent GST cut is expected to revive consumption further. The RBI projects GDP growth at 6.8 per cent for FY26 and 6.6 per cent for FY27, supporting a favourable macro backdrop. Credit demand is likely to stay strong in the second half of FY26, with systemic loan growth projected at 11–12 per cent.The bank continues to demonstrate a durable structural advantage, combining quality growth with resilient returns. Net interest margins expanded by 7 basis points sequentially in the second quarter, aided by timely repricing of deposits and improved liability management. Its CASA ratio stands at 36.9 per cent, with a CASA market share of 23 per cent and an overall deposits market share of more than 22 per cent.
With its balance sheet strength and deposit franchise, SBIN is well-positioned to grow faster than the industry and maintain its strong CASA base.
“SBI’s scale, pointing out that its ₹43 lakh crore loan book accounts for nearly 23–24 per cent of India’s total loan book, while maintaining a credit cost of just 50 bps and still growing at 12–14 per cent. On valuations, he said SBI’s FY27 EPS is estimated at ₹85, with a book value of ₹585 and subsidiary value of ₹280, implying the stock trades at barely 1.1x book for an RoA of 1.2 per cent that is trending toward 1.3 per cent,” Parag Thakkar of Fort Capital told ET Now.
Thakkar added that SBI hitting ₹1,150 within a year can’t be ruled out. While the stock has rallied sharply and is one of his top holdings, Thakkar believes any consolidation from here would be a buying opportunity.
The bank has delivered strong 25 per cent YoY growth in core fee. However, most of this is granular and there are no material one-offs. There is no meaningful change in the take rate, but it is more driven by volumes. SBI is confident of delivering healthy fee income growth going ahead as well, domestic brokerage firm ICICI Securities said in a note.
What should investors do next?
The bank’s healthy loan growth, a stronger revenue trajectory, and stable asset quality remain key positives, and analysts believe that there’s more to come. Following the second quarter earnings, CLSA reiterated its ‘Accumulate’ rating and raised the target price to ₹1,170 per share, forecasting an upside potential of 20 per cent from current market levels.
Domestic brokerage firm Axis Securities has a Buy rating and believes that SBI remains well-positioned to sustain its growth momentum, with no visible concerns on either growth or asset quality. With the NIM trajectory turning earlier than expected, the brokerage raised its FY26 NII estimates by about 3 per cent, while broadly maintaining its projections for FY27–28. Strong fee-income traction, controlled operating expenses that are keeping cost ratios in check, and a healthy asset-quality profile that is keeping credit costs benign have prompted an upward revision of FY27–28 earnings estimates by 3–5 per cent.
HSBC is also upbeat on the stock, maintaining its Buy call with a revised target price of ₹1,110, up from ₹960 per share. A stronger core Pre-Provisioning Operating Profit trajectory warrants higher multiples, HSBC wrote in its note.
Nomura expects SBI to deliver RoA and RoE of 1.1 per cent and 16 per cent over financial year 2027 and 2028, while a higher RoE outlook has resulted in an increase in the lender’s target multiple. Analysts have a price target of ₹1,100.
SBI enters the next leg of the cycle with a combination of balance-sheet strength, earnings visibility and multiple valuation re-rating triggers. Its improving NIM trajectory, and strong loan growth reinforce bullish sentiment. Even after a sharp rally, analysts see meaningful upside ahead, led by its resilience and long-term investment appeal.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
