SBI Jumps After Q1 Profit Beat: What Nomura and Morgan Stanley Expect Next For Banking Giant

SBI Jumps After Q1 Profit Beat: What Nomura and Morgan Stanley Expect Next For Banking Giant​

State Bank of India (SBI) witnessed a solid rise on Monday after announcing strong first-quarter results for FY27. The nation's largest public lender reported a 10% year-on-year (YoY) growth in its standalone net profit, reaching Rs 21,121 crore, which surpassed market expectations. This robust performance comes as the bank continues to show strength across all key operational metrics.

The stock of SBI gained 1.55%, closing at Rs 1,113 on the BSE. The company had previously reported a significant rise in net interest income (NII), which grew 15% YoY to Rs 46,992 crore. This suggests improved profitability driven by both lending and operational efficiencies.

SBI’s Stellar Q1 FY27 Financial Performance​

SBI confirmed its robust financial standing across the April-June quarter of FY27. The lender's operating profit climbed 10% YoY to Rs 33,529 crore. This reflects a successful return to growth trends after previous periods.

Key margins and balances also saw healthy improvements. Domestic net interest margin (NIM) stood at 3%, marking a recovery of 7 basis points from Q4 FY26. The whole-bank NIM improved by 5 basis points sequentially, settling at 2.86%. During the quarter, SBI's total business crossed Rs 110 lakh crore.

Asset Quality and Credit Growth Highlights​

The bank also showcased marked improvements in its asset quality metrics during Q1. The gross Net NPA ratio was recorded at 1.47%, which is a considerable improvement of 36 basis points from the previous year. The net NPA ratio further improved by 9 basis points to 0.38%.

Provision coverage ratios remain strong, with the provision coverage ratio standing at 74.2%. When including accounts under collection, the PCR stood impressively high at 91.82%. Overall advances grew strongly, with whole-bank advances rising 19% YoY and domestic advances climbing by 18.15%.

Expert Verdicts: Brokerages Weigh In On SBI’s Future Trajectory​

Brokerage houses have given diverse yet positive views on the results, reflecting confidence in the bank's core strength. Nuvama Institutional Equities retained a 'Buy' rating with a target price of Rs 1,300 apiece, indicating an upside exceeding 18% from its previous closing rate of Rs 1,097.

Morgan Stanley maintained an 'Equal Weight' stance on the shares, setting a target price at Rs 980. The firm noted that while the profit beat was excellent due to higher NII and lower operational expenses, it remains cautious about sustaining rapid loan versus deposit growth divergence.

Motilal Oswal Financial Services reinforced its ‘Buy’ call, raising the target price to Rs 1,370, suggesting an upside of around 25%. This domestic brokerage highlighted that SBI has met its guidance for domestic NIM at 3% and expects this level in FY27.

Outlook and Long-Term Stock Momentum​

Nuvama noted that SBI is well positioned for the future, pointing to the mobilization of $6 billion in FCNR deposits and potential benefits from stake sales in SBI MF and NSE. The bank is currently guiding for a credit growth rate of around 15% in FY27.

Nomura maintained a 'Neutral' rating but increased its target price to Rs 1,160, citing the healthy Q1 results and positive surprise on NIMs. Nomura cautioned that higher sustainable credit costs due to transitioning to new ECL norms pose a risk to SBI's return trajectory.

Despite mixed analyst outlooks, the stock shows consistent strength. Shares of the PSU lender have seen long-term gains exceeding 36% over one year, and remarkable rallies in three and five years compared to the broader Nifty 50 indices.