SBI shares in focus after Q3 PAT beats estimates. Should you buy, sell, or hold?

State Bank of India (SBI) shares will be in focus on Friday after the public sector lender reported an 84% year-on-year (YoY) rise in standalone net profit for the December quarter, reaching Rs 16,891 crore compared to Rs 9,163 crore in the same period last year. The profit exceeded Street estimates of Rs 16,219 crore.

SBI’s net interest income (NII) for Q3FY25 increased by 4.09% YoY to Rs 41,620 crore from Rs 39,816 crore reported in the year-ago period.

Meanwhile, the net interest margin (NIM) contracted by 19 bps YoY and 12 bps QoQ to 3.15% in the reported quarter. SBI’s operating profit for Q3FY25 grew by 15.81% YoY to Rs 23,551 crores.

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The interest income in Q3FY25 stood at Rs 1,17,427 crore, up 10% over Rs 1,06,734 crore reported in the corresponding quarter of the last financial year.

State Bank of India Q3 Credit Growth

The lender’s credit growth was reported at 13.49% YoY with domestic advances growing by 14.06% YoY. Gross advances crossed the Rs 40 lakh crore mark. The foreign offices’ advances grew by 10.35% YoY.

Q3 deposits

Whole bank deposits grew at 9.81% YoY, out of which CASA deposits grew by 4.46% YoY. CASA ratio stood at 39.20% as of December 31, 2024.

Asset Quality

The gross NPA ratio stood at 2.07%, which improved by 35 bps YoY while the net NPA ratio stood at 0.53% improving by 11 bps YoY.

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Should you buy, sell, or hold SBI’s stock? Here’s what analysts say:

Nuvama

Nuvama maintained a ‘Buy’ rating on SBI with a revised target price of Rs 950, down from Rs 1,026. The brokerage noted that the bank delivered a beat on credit costs but missed expectations on net interest margin (NIM). Asset quality remained strong, with a quarter-on-quarter (QoQ) decline in slippage. Additionally, specific credit costs saw a sharp 37% QoQ decline.

Macquarie

Macquarie maintained an ‘Outperform’ rating on SBI with a target price of Rs 700. The brokerage noted that lower pre-provision operating profit (PPOP) was offset by lower credit costs. It highlighted the importance of margin trajectory, with net interest margin (NIM) guidance reduced by 30 basis points to 3% levels. Additionally, credit costs are expected to increase due to upcoming Expected Credit Loss (ECL) norms and the normalization of recoveries.

Jefferies

Jefferies maintained a ‘Buy’ rating on SBI with a target price of Rs 970. The brokerage noted that the bank’s Q3 results were in line with expectations. It highlighted a steady uptick in deposit growth as a positive factor, though gross loan growth was offset by lower margins. Jefferies expects deposit growth to support 12-13% loan growth.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)