SBI share price falls over 10% from pre-results level; is the worst priced in?

Shares of State Bank of India (SBI) fell more than 3 per cent in early trade on Monday, extending losses after the lender’s weaker-than-expected March quarter earnings triggered a sharp selloff in the previous session. The stock traded near Rs 988.50, nearly 10 per cent below its pre-results level.

SBI shares had crashed over 7 per cent on Friday after the country’s largest bank reported pressure on net interest margins (NIMs), softer-than-expected net interest income (NII) growth and a sequential rise in slippages, disappointing Street expectations.

SBI shares had closed near Rs 1,019 after Friday’s post-results selloff.

The sharp fall in SBI share price has now raised a key question for investors — should they buy the dip or stay cautious?

Q4 results disappoint on margins

SBI reported a net profit of Rs 19,683.75 crore for Q4FY26, up 5.5 per cent year-on-year. However, operational performance remained weak.

Net interest income rose 4.1 per cent year-on-year to Rs 44,380 crore, missing Street expectations of 6–10 per cent growth. Domestic NIM contracted sharply to 2.93 per cent from 3.11 per cent in the previous quarter.

The lender also reported a sequential rise in fresh slippages to Rs 5,521 crore from Rs 4,458 crore, though gross NPAs improved to 1.49 per cent.

Brokerages largely attributed the weak quarter to lower loan yields after repo-linked repricing, MCLR resets and pressure on margins.

Macquarie stays positive despite earnings miss

Macquarie maintained its “Outperform” rating on SBI with a target price of Rs 1,150.

The brokerage said the earnings miss was largely driven by weak margins and treasury trading losses. However, it highlighted that asset quality continued to remain a bright spot.

Macquarie noted that SBI trades at 1.6x FY27 estimated price-to-book value, which it considers reasonable given expected return on equity (RoE) of 15 per cent.

JP Morgan sees NIM recovery ahead

JP Morgan maintained its “Overweight” call on SBI, though it cut the target price to Rs 1,225 from Rs 1,260.

The brokerage said SBI’s NII growth moderated sharply in Q4, while margins declined more than expected. However, it noted that management remains confident of NIM recovery in FY27 through various corrective measures.

JP Morgan added that asset quality trends remained benign despite a marginal rise in slippages.

Morgan Stanley cuts earnings estimates

Morgan Stanley maintained its “Equalweight” rating and lowered the target price to Rs 980 from Rs 1,000.

The brokerage said the key focus during the earnings call was the sharp decline in margins. While management expects some recovery in loan yields, Morgan Stanley reduced its FY27 and FY28 NIM forecasts by over 20 basis points.

It also trimmed earnings estimates for FY27 and FY28 by 4 per cent and 2 per cent, respectively.

CLSA says core business remains strong

CLSA maintained its “Accumulate” rating with a target price of Rs 1,275.

The brokerage said SBI’s pre-tax profit beat estimates due to lower operating expenses, lower credit costs and higher recoveries from written-off accounts.

However, it described the quarter as weak on the topline front because of a sharper-than-expected 17 basis point fall in NIM.

CLSA said loan growth of 17 per cent year-on-year remained best-in-class, while deposit growth improved to 11 per cent.

BoFA Securities remains bullish

BofA Securities maintained a “Buy” rating on SBI with a target price of Rs 1,200.

The brokerage said profit growth was supported by strong loan growth and lower credit costs, which partly offset margin compression and lower non-interest income.

BoFA highlighted SBI’s FY27 guidance of 13–15 per cent loan growth, NIM above 3 per cent, credit cost below 50 basis points and return on assets above 1 per cent.

Bernstein sees mixed outlook

Bernstein maintained a “Market Perform” rating with a target price of Rs 1,300.

The brokerage said SBI delivered a mixed quarter as loan growth accelerated but margins saw the steepest compression among large banks.

Bernstein noted that return on assets weakened due to treasury mark-to-market losses and margin pressure, though management reiterated its long-term target of 1 per cent plus RoA and 15 per cent plus RoE.

UBS remains cautious

UBS maintained a “Neutral” stance and cut its target price to Rs 1,080 from Rs 1,120.

The brokerage expects pressure on return ratios as treasury gains normalise and margins remain subdued.

UBS estimates SBI’s RoA could decline to 0.95 per cent during FY27-28 from around 1.12 per cent in FY26, and believes the current valuation fairly reflects the risks.