SBI shares in focus after strong Q3FY26 results; Nuvama raises target to Rs 1,250

Synopsis

SBI shares are set to remain in focus after the lender reported its highest-ever quarterly profit in Q3FY26, supported by healthy loan growth, stable margins and improving asset quality. Brokerage firm Nuvama Research upgraded its outlook on the stock and raised its target price, citing strong operating performance and sustained credit growth visibility.

Shares of State Bank of India (SBI), the country’s largest public sector lender, are expected to remain in focus in Monday’s trading session following a strong performance in the third quarter of FY26. The bank reported robust profit growth, steady improvement in asset quality and healthy loan growth, prompting brokerage firm Nuvama Research to upgrade its outlook on the stock with a target price of Rs 1,250.

SBI posted a 24% year-on-year (YoY) jump in standalone net profit at Rs 21,028 crore for Q3FY26, marking the highest-ever quarterly profit for the bank. The strong earnings were supported by sustained loan growth and stable margins.

Net interest income (NII), a key indicator of core lending performance, rose 9% YoY to Rs 45,190 crore, while operating profit (before provisions and contingencies) surged 40% YoY to Rs 32,862 crore, reflecting improved operating leverage.

The bank’s net interest margin (NIM) stood at 2.99% for the quarter, with domestic NIM at 3.12%. For the nine months ended December 2025, domestic NIM averaged 3.08%, indicating margin stability despite a challenging interest rate environment.

Asset quality continued to show improvement. SBI’s gross NPA ratio declined to 1.57%, improving by 50 basis points YoY, while net NPA fell to 0.39%, down 14 basis points. The slippage ratio remained contained at 0.40%, and credit cost was low at 0.29%, highlighting effective risk management.

The provision coverage ratio (PCR), including AUCA, stood at 92.37%, offering a strong buffer against potential stress.

On the balance sheet front, SBI’s total business crossed Rs 103 lakh crore, with deposits exceeding Rs 57 lakh crore and advances crossing Rs 46 lakh crore. Advances grew 15% YoY, driven primarily by 15% growth in domestic lending, underlining steady demand across segments.

Shares of SBI closed marginally lower on Friday, slipping 0.70% to settle at Rs 1,066.

Brokerage view:

Nuvama Research upgraded its outlook on SBI after the strong Q3 performance and raised its credit growth guidance to 13%–15% for FY26, from the earlier 12%–14%.

Key highlights from the brokerage view include:

• Double-digit corporate credit growth expected to continue through Q4FY26
• Exit NIM guidance of around 3% for FY26 maintained, with a long-term goal of sustaining this level across cycles
• Cost-to-income ratio targeted below 50% over the next 2–3 years
• Return on assets (ROA) target of 1% through cycles, with current performance tracking higher for the first nine months

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

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