Buy State Bank of India Ltd for the Target Rs 1,370 by Motilal Oswal Financial Services Ltd
Healthy earnings beat; domestic NIMs expand 7bp QoQ Guides for loan growth of 14-15%
* State Bank of India (SBIN) reported 1QFY27 PAT of INR211.2b (up 10.2% YoY/up 7.3% QoQ, 15% beat), led by robust treasury and controlled opex.
* NII grew 14.4% YoY/grew 6% QoQ to INR469.9b (in line). NIMs expanded 5bp QoQ to 2.86%, after a sharp fall of 17bp QoQ in 4QFY26. The bank has maintained its domestic NIMs guidance of 3%+ in FY27.
* Loan book grew 19% YoY/2.3% QoQ, while deposits grew 10% YoY/0.5% QoQ. Domestic CD ratio increased to ~74% and continues to provide adequate headroom to support growth. SBIN guided for FY27E loan growth of 14-15%.
* Fresh slippages increased to INR73.6b from INR55.5b in 4QFY26 due to seasonality in 1Q. GNPA/NNPA ratios declined 2bp/1bp QoQ to 1.47%/0.38%. PCR ratio, thus, stood largely stable at 74.2%.
* We raise our earnings estimates by ~3% each for FY27/FY28 and estimate FY27E RoA/RoE of 1.05%/15.9%. Reiterate BUY with a revised TP of INR1,370 (1.5x Mar’28E ABV + INR352 for subs)
Highlights from the management commentary
* The company recognized INR2.2b of interest on IT refunds vs nil in 1QFY26 and INR10b in 4QFY26.
* Foreign offices mobilized USD6b of FCNR(B) deposits, USD1b of OFCBs, and USD300m of ECBs. The company expects to mobilize USD10b of FCNR(B) deposits going forward.
* Credit growth guidance of 14-15% is anchored on nominal GDP expectations of 12-12.5%. The bank expects domestic NIMs to remain above 3% in FY27.
* INR12.7b of provisions include INR8.5b for PLI provision. Last year, PLI provision was back-ended; this year, the bank has decided to spread this out quarterly.
* The company had INR3t of excess SLR as of Jun’26. Including FCNR(B) deposits, the excess SLR stands at INR4t
Valuation and view: Reiterate BUY with a TP of INR1,370
SBIN delivered a steady quarter, with healthy NII, while NIMs expanded following the sharp decline seen in 4Q. The bank now matches its domestic NIM guidance of 3% and expects to sustain this level for FY27, supported by improving yields and a healthier credit growth outlook of 14-15%. Treasury gains remained strong and provided support to PAT. Besides, treasury and opex remained well under control, resulting in a better-than-expected PPoP performance. Management continues to remain constructive on loan growth and has reiterated its guidance of 14-15% growth going forward. Asset quality remained resilient overall, although slippages were marginally higher during 1Q due to seasonal factors. We raise our earnings estimates by ~3% each for FY27/FY28 and expect FY27E RoA/RoE of 1.05%/15.9%. Reiterate BUY with a revised TP of INR1,370 (1.5x Mar’28E ABV + INR352 for subs).
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
