SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity?

SBI reported a strong 84% YoY surge in Q3 FY25 net profit to ₹16,891 crore, with steady loan growth and improved asset quality. Despite this, the stock fell 1.58% due to margin pressures and weak deposit growth. Analysts remain bullish, with target prices ranging from ₹925 to ₹1,070, suggesting a buying opportunity on dips.

CONTENTS:

• SBI Share Price Drops After Strong Q3 Results – Buying Opportunity?
• SBI Q3 FY25 Results: Net Profit Soars 84% to ₹16,891 Crore, NII Rises 4%; Stock Declines
• SBI Q3 Results: Lower Provisions Drive Profitability, Brokerages Maintain Positive Outlook
• Analysts Lower SBI Earnings and Share Target Price After Mixed Q3 Performance

SBI Share Price Drops After Strong Q3 Results – Buying Opportunity?

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity?

Despite reporting impressive Q3 FY25 earnings, State Bank of India (SBI) saw a 1.58% decline in its share price, closing at ₹753.95 on Thursday. The public sector lender posted an 84% year-on-year (YoY) surge in net profit to ₹16,891 crore for the quarter ending December 31, 2024, significantly surpassing expectations. This compares to ₹9,164 crore in the same period last year.

SBI’s net interest income (NII) rose by 4% YoY to ₹41,446 crore, while employee expenses saw a notable 17% decline to ₹16,074 crore. The bank’s domestic loans grew by 14.06% YoY, and the net interest margin (NIM) for Q3 FY25 stood at 3.01% for the entire bank and 3.15% for domestic operations. Asset quality showed improvement, with the gross NPA ratio decreasing to 2.07% from 2.13% in the previous quarter, while the net NPA ratio remained steady at 0.53%.

SBI’s deposit base expanded by 9.81% YoY to ₹52.3 lakh crore, with CASA deposits growing 4.46%, bringing the CASA ratio to 39.20%. Analysts highlight the bank’s strong credit growth and steady deposit mobilization.

Market Outlook and Investment Strategy

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity? According to Sumeet Bagadia, Executive Director at Choice Broking, SBI has formed a strong support base at ₹720. If this level holds, the stock may rebound towards ₹780-₹800. Existing shareholders are advised to maintain a stop-loss at ₹720, while new investors can consider buying in momentum and on dips for short-term gains.

With interest rates expected to decline, net interest margins may face temporary pressure due to 40% of loans being linked to the repo rate. However, the ability to reprice short-term loans could help offset this impact. Analysts suggest that monitoring management’s guidance on deposit growth, credit performance, and margins will be crucial going forward.

SBI Q3 FY25 Results: Net Profit Soars 84% to ₹16,891 Crore, NII Rises 4%; Stock Declines

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity? State Bank of India (SBI) reported a significant 84.32% year-on-year (YoY) increase in its standalone net profit, reaching ₹16,891.44 crore for the quarter ending December 2024, compared to ₹9,163.96 crore in the same period last year.

The bank’s net interest income (NII) rose by 4% YoY to ₹41,446 crore in Q3 FY25, up from ₹39,815 crore in the corresponding quarter of the previous fiscal. Additionally, total income expanded by 8.69% to ₹1,28,467 crore from ₹1,18,193 crore a year earlier.

Asset Quality and Provisions

SBI demonstrated improvement in asset quality, with the gross non-performing asset (NPA) ratio decreasing by 35 basis points to 2.07%, compared to 2.42% a year earlier and 2.13% in the previous quarter. The net NPA ratio also declined to 0.53%, down from 0.64% in Q3 FY24, while remaining unchanged from the previous quarter.

The bank’s provisions stood at ₹911 crore, up from ₹688 crore in Q3 FY24 but significantly lower than ₹4,506 crore in Q2 FY25.

Loan Growth and Digital Banking

SBI reported a 13.49% YoY growth in credit, with domestic advances increasing by 14.06%. Gross advances have now surpassed ₹40 lakh crore. The bank’s net interest margin (NIM) for Q3 FY25 stood at 3.01% for the entire bank and 3.15% for domestic operations.

SBI also highlighted its digital banking expansion, noting that 64% of new savings accounts in Q3 were opened via its YONO platform, which now has 8.45 crore registered users.

Market Reaction

Despite strong earnings, SBI’s share price declined, trading 0.55% lower at ₹761.80 on the National Stock Exchange (NSE) at 2:43 p.m. on February 6, 2025.

On a consolidated level, SBI Group’s post-tax profit surged 70.39% YoY to ₹18,853.16 crore in Q3 FY25, compared to ₹11,064.14 crore in the same period last year.

SBI Q3 Results: Lower Provisions Drive Profitability, Brokerages Maintain Positive Outlook

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity? State Bank of India (SBI) posted mixed Q3 results, with lower provisions boosting profitability despite margin moderation and weaker treasury income. As a result, some brokerages have slightly reduced their target prices for the stock.

Key Takeaways from SBI’s Q3 Performance

• Net Interest Margin (NIM): SBI expects its NIM to remain above 3%.
• Deposit Growth: The bank has guided for 10% year-on-year (YoY) deposit growth.
• Loan Growth: Credit growth stood at 13.8% YoY across segments, though unsecured loans (Xpress Credit) saw slower expansion.
• Asset Quality: Fresh slippages and credit costs remained controlled, with restructuring limited to 0.34% of advances.
• CASA Ratio: The Current Account and Savings Account (CASA) ratio fell to 37.6% due to weaker savings account balances.

Brokerage Views and Target Prices

• Motilal Oswal Financial Services (MOFSL):
  • Acknowledged strong loan growth but noted softer deposit growth and CASA pressure.
  • Cut FY26–FY27 earnings estimates by 1.7–3.4%.
  • Expects a return on assets (RoA) of 1.05% and return on equity (RoE) of 16.8% for FY27.
  • Maintained a ‘Buy’ rating with a target price of ₹925.

• HDFC Institutional Equities:
  • SBI’s Q3 earnings missed estimates due to lower treasury gains and softer margins but were supported by strong operational performance.
  • Despite weaker Xpress Credit growth, overall loan growth remained healthy.
  • Retained ‘Buy’ rating with a target price of ₹1,050.

• Nirmal Bang Institutional Equities:
  • Adjusted SBI’s valuation to 1.4x its estimated book value for December 2026.
  • Revised the target price to ₹1,016 from ₹1,055, including a subsidiary value per share of ₹248.90.
  • Remains positive on SBI’s leadership in corporate and retail banking and its strong asset quality.

• Another Domestic Brokerage:
  • Expects SBI’s loan growth to be 14–16% for FY25, with a recovery in Xpress Credit.
  • Revised target price to ₹950 from ₹1,026, maintaining a ‘Buy’ rating.

Market Performance

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity? Despite strong earnings, SBI’s stock declined 1.79% on Thursday, closing at ₹752.35 on the BSE.

SBI’s management remains optimistic about achieving stable NIM, double-digit deposit growth, and an RoA of at least 1% going forward.

Analysts Lower SBI Earnings and Share Target Price After Mixed Q3 Performance

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity? Analysts have revised their earnings estimates for State Bank of India (SBI) following a slight miss in the bank’s December quarter (Q3FY25) results. While most brokerages maintain a ‘buy’ rating, some have adjusted their target prices downward due to weak deposit growth and lower margins.

SBI Share Performance

SBI’s stock declined by 1.5% intraday, reaching a low of ₹740.9 per share. As of 10:44 AM IST, the share price stood at ₹743.30, down 1.19%, while the BSE Sensex dropped by 0.11%.

Key Q3FY25 Financial Highlights

• Net Profit: ₹16,891.44 crore, up 84.3% YoY but down 7.8% QoQ.
• Net Interest Income (NII): ₹41,446 crore, increasing 4% YoY but declining 0.4% QoQ.
• Net Interest Margin (NIM): Declined to 3.01% from 3.14% in the previous quarter.
• Gross Non-Performing Asset (GNPA) Ratio: Improved to 2.07% from 2.14% QoQ.
• Net Non-Performing Asset (NNPA) Ratio: Remained stable at 0.53%.

Brokerage Views on SBI Stock

Emkay Global Financial Services

• SBI’s credit growth outpaced peers, driven by strong retail and corporate lending.
• Deposits increased at a slower pace, with weak CASA growth and rising funding costs.
• Earnings estimates for FY25-27 were reduced by 2-3%, but the bank remains well-positioned for market share gains.
• Target Price: ₹1,025 (unchanged).

Nuvama Institutional Equities

• SBI has increased its Marginal Cost of Funds Based Lending Rate (MCLR), with potential benefits expected in Q4FY25.
• The bank anticipates 14-16% loan growth in FY25, with stable NIM and RoA.
• NII estimates were reduced by 2.2% for FY25 and 4% for FY26.
• Target Price: ₹950 (revised from ₹1,026).

HDFC Securities

• SBI’s Q3 earnings were below estimates due to lower treasury gains and weaker margins, but operational performance was strong.
• The brokerage sees the bank as well-positioned for growth but highlights the need for capital raising.
• Target Price: ₹1,070 (unchanged).

Motilal Oswal Financial Services

• Earnings estimates were cut by 1.7% for FY26 and 3.4% for FY27 due to margin pressure.
• SBI’s RoA and RoE projections stand at 1.05% and 16.8%, respectively.
• Target Price: ₹925 (lowered).

JM Financial Institutional Securities

• SBI’s net profit growth was supported by lower-than-expected provisions, but weak NII and other income impacted operating profit.
• While SBI remains strong in a challenging deposit environment, margin management amid potential rate cuts remains a key factor.
• Target Price: ₹940 (down from ₹1,050).

Outlook

SBI Share Price Drops Despite Strong Q3 Results – Buying Opportunity? Despite the mixed Q3 results, analysts remain optimistic about SBI’s long-term potential, citing strong credit growth and profitability. However, concerns over deposit mobilization and margin pressures have led to a downward revision in earnings estimates and target prices.