SBI share price at Rs 1,100? Why this PSU bank remains MOFSL’s preferred banking pick

State Bank of India (SBI) is well-placed to deliver steady loan growth and resilient profitability, Motilal Oswal Financial Services said on Thursday after meeting the bank’s top management. India's most-valued PSU at Rs 9.67 lakh crore is the brokerage's preferred 'Buy' in the banking sector. It suggested a target price of Rs 1,100 on the SBI stock. The scrip settled at Rs 975.90 on Wednesday.

MOFSL said SBI’s management, led by chairman CS Setty, along with Anindya Paul, deputy managing director (finance), and Ravi Shankar Akella, chief general manager (finance), indicated that the bank is poised to sustain 13-14 per cent year-on-year loan growth, even in the absence of a broad-based corporate capex cycle. SBI had already reported 13.1 per cent advance growth in the second quarter of FY26, keeping it on track to meet full-year guidance, compared with system credit growth of about 11.5 per cent.

The brokerage said growth continued to be driven by the retail, agriculture and MSME (RAM) segments, alongside a pickup in personal loans and selective utilisation of working capital limits. Large-ticket project lending remained muted, reflecting the subdued corporate capex environment. Corporate loan growth stood at a modest 7 per cent year-on-year in the second quarter, while MOFSL estimated SBI’s loan book to grow at a CAGR of 12.4 per cent over FY26-28.

MOFSL said the RAM portfolio has emerged as SBI’s primary growth engine, crossing Rs 25 lakh crore and accounting for nearly 56.6 per cent of domestic advances. Retail loans grew 14.1 per cent year-on-year, with management flagging a visible revival in personal loans. SBI continued to be the largest unsecured personal loan lender, with a book of nearly Rs 3.5 lakh crore, supported by the addition of around 4.2 lakh new salary accounts in FY26 year-to-date.

On the corporate side, MOFSL noted that lending remained highly selective, focused on structurally relevant themes such as renewables, electric vehicles and technology-linked mobility, rather than traditional heavy industries. While headline capex activity remained limited, consumption-led sectors, particularly automobiles, had shown traction over the past two quarters, aiding working capital demand.

On margins, MOFSL said SBI’s domestic net interest margin improved sequentially to about 3.09 per cent in the second quarter, aided by deposit repricing and the impact of CRR cuts, while overall NIM stood at around 2.97 per cent. Management reiterated its FY26 exit NIM guidance of over 3 per cent, despite a 25 basis point repo rate cut in December 2025, noting that the margin impact would be limited and cushioned by CRR benefits.

MOFSL said SBI’s large low-cost CASA base of around Rs 21 lakh crore, pricing discipline and diversified loan mix provided comfort that margins would remain resilient in a softer rate environment. The brokerage estimated NIM at 2.8 per cent in FY26 versus 2.9 per cent in FY25, with a calibrated improvement to 2.9-3.0 per cent over FY27-28, supporting a net interest income CAGR of about 14 per cent over FY26-28.