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Remaining in a selling zone for the second straight day, shares of State Bank of India (SBI) dropped another 4.5% in Monday's trade on May 11 to hit a four-month low of ₹975 apiece, as investors continued to dump the counter following the lender's earnings miss in the March quarter.
The two-day selloff has dragged the stock down by a cumulative 11%, eroding nearly ₹1,11,683 crore in market capitalisation and pulling the lender’s valuation below the ₹9 lakh crore mark to ₹8,99,925 lakh crore.
The lender announced its Q4 and fiscal 2025-2026 results on Friday during market hours, which came in below Street estimates. The impact was immediately reflected in the stock, which suffered a sharp decline and ended the session with a steep 7% loss.
SBI shares dropped due to an earnings miss in the March quarter. The Net Interest Income (NII) growth lagged loan growth, and Net Interest Margins (NIMs) contracted due to factors like repo rate transmission and MCLR cuts.
SBI reported a 5.6% year-on-year rise in standalone net profit to ₹19,683.75 crore. However, Net Interest Income (NII) increased by only 4.13% year-on-year, and the NIM for Q4FY26 stood at 2.81%, down 18 basis points quarter-on-quarter.
The RBI's 25 basis points repo rate cut in December led to a repricing of external benchmark lending rate (EBLR) loans, which account for about 50% of SBI's total loans. This, along with MCLR reductions, weighed on loan yields and contributed to a sequential drop in domestic NIM.
SBI's management aims to sustain domestic NIMs above 3% in FY27, focusing on annual trends rather than quarterly fluctuations. Profitability in FY27 could improve if credit costs remain contained and interest rates stabilize or increase.
Canara Bank reported a 10% year-on-year fall in standalone profit to ₹4,505.57 crore for Q4FY26. Net Interest Income (NII) rose by nearly 4% year-on-year, but Net Interest Margin (NIM) eased to 2.54% from 2.73% YoY.
Domestic brokerage firm Motilal Oswal said SBI reported a mixed quarter, impacted by a decline in NII and contraction in NIM due to repo rate transmission, MCLR cuts, and migration of select corporate loans from MCLR-linked rates to T-bill-linked rates. Treasury profits were also weaker during the quarter amid a spike in bond yields.
Asset quality remained resilient overall, although slippages were slightly higher in 4Q, reflecting the seasonality typically seen across PSU banks.
Consequently, the brokerage trimmed its earnings estimates by 3% and 5% for FY27 and FY28, respectively, as it cut NIM estimates, partly offset by lower provisions. However, it maintained its 'buy' rating on the stock with a target price of ₹1,300 apiece.
“SBI’s core fundamentals are stable, and delivery on growth along with controlled credit costs should support return ratios sustaining above 1%. However, we believe these outcomes will be overshadowed by the NIM/NII performance in FY27E,” said JM Financial.
The brokerage expects SBI to maintain a 1% RoA and an average RoE of 14% over FY26–28E. It broadly maintained its EPS estimates but revised its target price marginally to ₹1,200 from the earlier ₹1,210, valuing the stock at 1.3x FY28E BVPS.
Similarly, Axis Direct also lowered its target price on SBI to ₹1,285 apiece from the earlier ₹1,350 apiece, while retaining its 'buy' rating.
State Bank of India reported a 5.6% year-on-year (YoY) rise in standalone net profit for the January–March quarter of FY26 (Q4FY26) to ₹19,683.75 crore. In the corresponding quarter of the previous financial year, the PSU bank’s profit stood at ₹18,643 crore.
However, sequentially, or on a quarter-on-quarter (QoQ) basis, profit declined 6.4% from ₹21,028.15 crore reported in Q3FY26.
Operating profit declined 11.45% YoY and 15.70% QoQ to ₹27,704 crore.
Net interest income (NII) increased just 4.13% YoY and declined 1.35% QoQ. The whole bank NIM for Q4FY26 stood at 2.81%, down 18 basis points QoQ, while domestic NIM declined to 2.93%.
Asset quality continued to improve, with the gross NPA ratio declining to 1.49% and net NPA remaining low at 0.39%.
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Ksheera Sagar has been working as a Market Research Analyst at LiveMint for the past four years, covering stocks, commodities, and broader financial markets. In this role, he closely tracks daily market movements, corporate earnings, sector trends, and macroeconomic developments. <br><br> He has over a decade of experience in the financial services industry and has previously worked with multiple organisations, including global investment bank J.P. Morgan, bringing strong research experience into the newsroom. <br><br> During his career, he has gained extensive exposure to equity research, market analysis, and financial data interpretation, strengthening his expertise across asset classes and market cycles. <br><br> He is known for his data-driven analysis and crisp, listicle-style market stories that break down complex financial developments across key markets for a wide audience. His strong research skills enable him to write detailed and insightful stories on stocks and sectors, focusing on the underlying factors driving market movements. <br><br> His work combines quantitative insights with clear storytelling, presenting financial developments in a clear and structured manner. Moreover, he enjoys writing multibagger and listicle-style copies. Outside of work, Ksheera enjoys playing the piano and exploring new places. He has a keen interest in travel, music, and continuously learning about global markets and economic trends.
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