State Bank of India (SBIN IN) (Neutral) - 4Q26: Weak operating performance; downgrade to Neutral

Research evidence excerpt

State Bank of India (SBIN IN) (Neutral) - 4Q26: Weak operating performance; downgrade to Neutral

Global Markets Research

State Bank of India SBI.NS SBIN IN 11 May 2026

EQUITY: BANKS

4Q26: Weak operating performance; downgrade to Neutral Rating Down from Buy Neutral

NIM disappoints, LCR down, credit cost supports; downgrade to Neutral Target price

Reduced from INR INR 1,140with lower TP of INR1,140 1,205

SBI reported weak operating performance with core-PPOP of INR254bn (-6% q-q, +15% y-y), Closing price INR 1,019 8 May 20265% lower than our est, as NII missed our est by 5% due to a 16bp q-q margin decline even as

opex was 1% lower than expected. Margin decline was attributable to 25bp repo / 5bp MCLR

Implied upsidecuts and shift in corporate lending towards EBLR/T-bill linked loans. However, benign credit +11.9%

cost of 24bp (-16bp q-q, vs our est of 32bp) and a lower effective tax rate (20.7%) led to PAT

Market Cap (USD mn) 99,579.5

beat of 5%. Adjusting for PCR decline of 118bp q-q, credit cost was at 31bp. We revise our ADT (USD mn) 229.6

FY27F/28F EPS estimates by +1%/-4% respectively (factoring in the stake sale in SBIMF in

FY27F) as lower margins partly offset by lower opex and lower provisions. Sharp LCR decline Relative performance chart

(to 124% vs 138% in 3Q26, Fig.7) in combination with pressure on funding cost could weigh

on earnings growth in the near term. Moreover, higher sustainable credit cost on transition to

new ECL norms may pose risks to ROA trajectory, in our view. SBIN (core-bank) currently

trades at 1.2x FY28F BVPS and we do not expect a material re-rating from current levels. We

downgrade SBI to Neutral (from Buy) with a lower TP of INR1,140 (vs INR1,205 earlier).

Margin disappoints but controlled opex and lower credit costs support PAT