Prabhudas Lilladher has issued a buy rating on State Bank of India with a target price of ₹1,200 in its research report dated May 09, 2026. According to the brokerage's analysis, the recommendation comes despite the bank's challenging quarterly performance, with the target price revised down from the previous ₹1,280.
SBI experienced a weak quarter due to a 4.2% miss on Net Interest Income (NII) driven by an 18 basis points quarter-on-quarter fall in domestic Net Interest Margin (NIM) to 2.93%. However, the bank's core Profit After Tax (PAT) was 12.7% ahead of estimates due to better performance in fees, operating expenses, and provisions. As reported by Prabhudas Lilladher, the sharp decline in NIM was attributed to a 25 basis points cut in repo rate, faster corporate growth quarter-on-quarter, and a shift in corporate mix towards lower-yielding treasury bill loans.
The bank expects loan yield improvement from Q4 FY26 levels through strategic measures including slowing down corporate growth in FY27 with guidance of 12-13% versus 16.6% in FY26. According to Prabhudas Lilladher's analysis, the bank plans to focus on better-yielding accounts to improve margins. The brokerage has trimmed NII by an average of 2.8% for FY27/28E and cut core PAT by an average of 4% while maintaining a multiple of 1.4x on March 2028 core Adjusted Book Value.
