SBI share price falls over 3% after Q1FY25 results. Is this a stock to buy today?

SBI share price declined over 3% on Monday amid broader market sell-off even after the state-run largest lender delivered better than expected Q1 results. SBI shares fell as much as 3.54% to ₹817.85 apiece on the BSE.

State Bank of India (SBI) reported broadly healthy and in-line net profit on the back of a strong 16% YoY credit growth and lower opex.

SBI’s net profit in the first quarter of FY25 increased 0.89% to ₹17,035.16 crore from ₹16,884.29 crore in the same quarter the previous year.

The PSU Bank’s net interest income (NII) in Q1FY25 rose 5.7% year-on-year (YoY) and fell 1.3% quarter-on-quarter (QoQ) to ₹41,125 crore. The net interest margin (NIM) dropped 12 basis points (bps) to 3.35% from 3.47% YoY.

SBI’s management is confident of delivering healthy credit growth of 13-15% in FY25 with margins around current levels.

The bank announced fundraising upto ₹25,000 crore through the issuance of tier-1 and tier-2 bonds to Indian and foreign investors in the financial year 2024-25.

Analysts remained bullish on SBI shares after its Q1 results beat estimates with strong loan growth and stable asset quality.

“We believe the bank should raise capital sooner, factoring in the potential impact of the soon-to-be-released final ECL norms and growth trajectory. Considering the healthy growth trajectory and benefit from lower opex/LLP, we expect the bank to deliver 1.1% RoA and 17-19% RoE,” said Anand Dama, Senior Research Analyst at Emkay Global Financial Services.

The brokerage firm retained a ‘Buy’ rating on SBI shares and raised the target price to ₹1,025 per share from ₹950 earlier, now valuing standalone bank at 1.5x Jun-26E ABV and subsidiary/inv at ₹260 per share.

Nuvama Institutional Equities noted that the addition to CET1 from new investment norms at 11 bps was lower than the guided 50 bps due to change in investment mix (higher share of HTM than earlier) and mark down of ₹13 billion on some AFS securities.

“Given the lower impact of new investment norms compared with guidance and peers, the near-term stock reaction shall likely be subdued. Maintain ‘Buy’ with its above-average loan growth of 15% and strong deposit franchise in a deposit-challenged sector,” Nuvama Equities said.

The brokerage firm SBI share price target of ₹1,026 apiece, based on 1.5x BV FY26E. It believes if SBI raises fresh equity, then a key overhang on the stock would be addressed.

Analysts at Antique Stock Broking believe SBI’s strong balance sheet is positive and its commentary on being ECL ready is comforting, nevertheless NIM trend and retail asset quality needs to be monitored.

“Valuations of 1.6x/ 1.3x FY25/ 26 BV (on core banking) are likely to leave limited near-term upside, but strong internal accruals, excess liquidity (69% domestic gross loan to deposit ratio), and best-in-class cost of deposits at 5%, makes it a strong franchise within PSU banks,” Antique Stock Broking said.

The brokerage firm maintained a ‘Buy’ call on SBI shares with a target price of ₹975 per share.

Is SBI stock to buy today?

Speaking on the SBI share price outlook, Sumeet Bagadia, Executive Director at Choice Broking, said, “In the wake of the stock market crash, I suggest buying SBI shares at around ₹790 to ₹800 apiece for the short-term target of ₹860 and ₹900. However, one must maintain a strict stop loss at ₹760 while taking any fresh buying position in SBI shares.

SBI share price has risen more than 29% year-to-date (YTD), while the PSU stock has gained over 44% in the past one year. 

At 10:00 am, SBI shares were trading 2.05% lower at ₹830.55 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.