PSU bank SBI among top Diwali stock picks of multiple brokerages; here's why

State Bank of India (SBI) was the first stock recommendation by Nirmal Bang Institutional Equities in its Samvat 2082 note, citing its leadership in both corporate and retail lending, a strong capital base, and a robust deposit franchise, which the broker believes positions the bank to selectively lend to high-quality borrowers. Nirmal Bang noted that SBI’s MSME portfolio is largely secured or backed by CGTMSE guarantees, suggesting a target price of Rs 1,040.

Nirmal Bang is not alone in recommending the PSU stock as a top Diwali pick.

Mirae Asset Sharekhan expects the bank to sustain an RoA of 1 per cent and RoE of 14–15 per cent over the near to medium term, given no emerging asset quality concerns.

“Core operating profitability is expected to face pressure in FY2026E, which is already priced in. Management’s focus remains on ramping up treasury and fee income. Coupled with a robust balance sheet and improving system liquidity, the bank is well-positioned to capitalize on growth,” it said.

PL Capital, which includes SBI among its six large-cap picks, expects credit growth to accelerate in H2FY26 and FY27. The brokerage maintains SBI as its top PSU pick, citing a consistent track record of outperforming system growth.

The recent Rs 25,000-crore capital raise is expected to support expansion. SBI’s higher unsecured and NBFC exposure, along with a larger contingent provision buffer relative to other PSUs, positions the bank to navigate the ECL transition effectively, PL Capital noted.

MOFSL also lists SBI among its Diwali picks, assigning a target of Rs 1,000.

LKP Securities highlights SBI on technical grounds. On the monthly chart, the stock remains in a clear uptrend, supported by its rising trendline and a strong close above the 20 EMA following a breakout from a sideways trend in May 2021.

“On the weekly chart, the stock has sustained a consolidation breakout above its 20-week EMA, with RSI showing a bullish crossover. These indicators point to a continuation of the uptrend with sustained momentum,” it said, recommending SBI as a Diwali pick.