India’s largest bank, SBI, sees its shares rising 25% by 2025. Can she continue to perform in 2026?

State Bank of India, the country’s largest lender, is on track for one of the strongest years in recent history. The stock is up 25% so far in 2025, easily outpacing all private sector peers within the Nifty. The performance marks a clear shift in momentum for the bank: after a moderate 5% increase in 2023 and a more respectable 23% increase in 2024, this year’s progress positions SBI for the fifth straight year of positive returns and its most impressive performance in two years.SBI’s appeal extends far beyond its size. An anchor of the Indian banking system and a long-time favorite among institutional and long-term investors, the lender is entering a phase where stabilizing credit growth, evolving interest rate expectations and continued improvements in asset quality are creating a more sustainable path for profits. Against this backdrop, analysts believe that targets of Rs 1,100 and above are increasingly achievable, underscoring the bank’s strengthening position in the broader financial landscape.

What fuels growth?

Demand remains healthy and the recent VAT reduction is expected to further revive consumption. The RBI expects GDP growth of 6.8% for FY26 and 6.6% for FY27, supporting a favorable macroeconomic backdrop. Credit demand is likely to remain strong in the second half of FY26, with systemically important credit growth estimated at 11-12%. The bank continues to demonstrate sustainable structural advantage, combining quality growth with resilient returns. Net interest margins increased 7 basis points sequentially in the second quarter, helped by timely repricing of deposits and improved liability management. The CASA ratio stands at 36.9%, with a CASA market share of 23% and an overall deposit market share of over 22%.

With its strong balance sheet and deposit franchise, SBIN is well positioned to grow faster than the sector and maintain its strong CASA base.

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SBI’s size, noting that its loan book of Rs 43 lakh crore represents almost 23-24% of the total Indian loan book, while credit cost is just 50 basis points and still growing at 12-14%. On valuations, he said SBI’s EPS for FY27 is estimated at Rs 85, with a book value of Rs 585 and subsidiary value of Rs 280, which makes the stock trading at barely 1.1x book value for a RoA of 1.2%, which is trending towards 1.3%,” Parag Thakkar of Fort Capital told ET Now.

Thakkar added that an SBI reaching Rs 1,150 within a year cannot be ruled out. While the shares have risen sharply and are one of his top holdings, Thakkar believes any consolidation from here on would be a buying opportunity.The bank has achieved strong 25% year-on-year growth in core compensation. However, most of this is detailed and there are no material one-off effects. There is no meaningful change in recording speed, but it is more determined by volumes. SBI is confident of achieving healthy fee and commission income growth in the future as well, domestic brokerage firm ICICI Securities said in a note.

What should investors do now?

The bank’s healthy credit growth, stronger earnings trajectory and stable asset quality remain key positives, and analysts believe there is more to come. Following the second quarter earnings results, CLSA reiterated its ‘Accumulate’ rating and raised the target price to Rs 1,170 per share, projecting an upside potential of 20% from current market levels.

Domestic brokerage firm Axis Securities has a Buy rating and believes SBI remains well positioned to maintain growth momentum, with no visible concerns over growth or asset quality. With the NIM trajectory turning sooner than expected, the brokerage increased its FY26 NII estimates by about 3%, while broadly maintaining its FY27-28 projections. Strong growth in commission income, controlled operating costs that keep expense ratios in check, and a healthy asset quality profile that keeps credit costs favorable have led to an upward revision of FY27-28 earnings estimates by 3 to 5%.

HSBC is also bullish on the stock and maintains its buy call with a revised price target of Rs 1,110, up from Rs 960 per share. Stronger core operating profit trajectory before provisions justifies higher multiples, HSBC wrote in its note.

Nomura expects SBI to achieve a RoA and RoE of 1.1% and 16% over fiscal 2027 and 2028, while higher RoE prospects have resulted in an increase in the lender’s target. Analysts have a price target of Rs 1,100.

SBI enters the next phase of the cycle with a combination of strong balance sheets, earnings visibility and multiple valuation re-rating triggers. The improving NIM trajectory and strong credit growth reinforce the bullish sentiment. Even after a sharp rally, analysts see meaningful upside potential, mainly due to its resilience and long-term investment appeal.

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