State Bank Of India Q3 Review: Nuvama upgrades outlook on SBI After strong Q3; target price at Rs 1,250

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Nuvama Research has delivered a positive assessment of State Bank of India’s Q3FY26 performance, highlighting strong core earnings, healthy loan growth and improving margins. The brokerage noted that SBI outperformed expectations with a 6 per cent quarter‑on‑quarter expansion in advances, a 5 per cent rise in net interest income and lower operating expenses, supported by one‑off gains including a special dividend from SBI AMC. With asset quality stable and return ratios steady, Nuvama raised its FY26 loan‑growth outlook for the bank and revised put 12‑month target price to Rs 1,250, reiterating SBI as its top ‘Buy’ call and identifying it as a sector outperformer.

Credit growth guidance has been revised upward to 13%–15% for FY26 from the earlier 12%–14%, supported by recent trends.
Double digit credit growth in the corporate segment is expected to continue through Q4.
Exit NIM guidance of approximately 3% for FY26 has been maintained, with a long term objective of sustaining NIM around 3% across cycles.
Management intends to keep the cost-to-income ratio below 50% over the next two to three years.
The bank continues to target an ROA of 1% through the cycles, though it is currently tracking higher for the first nine months.

In FY26-Q3 the bank posted a 24.5 per cent year‑on‑year rise in net profit. The country’s largest lender posted a profit of Rs 21,028 crore, compared with Rs 16,891 crore in Q3FY25, reflecting improved operational performance during the quarter.

The bank’s net interest income also grew at a steady pace. NII for Q3FY26 stood at Rs 45,191 crore, marking a 9 per cent increase from Rs 41,445 crore in the year‑ago period.

Asset quality showed further strengthening on a sequential basis. Gross non-performing assets eased to 1.57 per cent in Q3FY26 from 1.73 per cent in Q2FY26, while net NPA improved marginally to 0.39 per cent compared with 0.42 per cent in the previous quarter. The improvement highlights better recoveries and stable credit behaviour across borrower segments.

Provisioning requirements also moderated during the quarter. SBI set aside Rs 4,507 crore in provisions in Q3FY26, lower than the Rs 5,400 crore provided in Q2FY26. The decline in provisioning burden, combined with healthy operational metrics, contributed to the overall profitability boost for the bank in the December quarter.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)

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