SBI shares likely to hit fresh record high in a year - Rationale explained with target price

Shares of State Bank of India (SBI) SBI are likely to touch a fresh record high in a year, according to Axis Securities. The banking stock hit a record high of Rs 1234.80 on February 24, 2026. Brokerage Axis Securities has assigned a price target of Rs 1280 on the stock of SBI. While maintaining its 'buy' recommendation, Axis said the lender remains well-positioned to capitalise on India's accelerating economic growth through its dominant franchise, improving operational efficiency, strong capital position, and increasing participation in emerging sectors such as renewable energy, data centres, and semiconductors.

According to the brokerage, the stock enters FY27 from a position of considerable strength, backed by healthy capitalisation, strong asset quality, robust growth momentum, and a growing presence in emerging sectors. Axis expects the bank to deliver Credit/Deposit/NII/Earnings CAGR of 14%/11%/15%/9%, respectively, over FY26-28E while consistently maintaining RoA at around 1%.

SBI clocked a strong performance in FY26, successfully balancing growth, profitability, and asset quality despite industry-wide margin pressures and volatile treasury income. 

Strong Loan Growth Backed by Diverse Opportunities

SBI delivered healthy credit growth of 17.2% year-on-year in FY26, driven by broad-based expansion across corporate, SME, agriculture, and retail lending segments. The strongest momentum came from SMEs, which grew 21%, followed by agriculture at 20% and corporate loans at 15%. The growth was supported by a healthy project pipeline and increasing opportunities in emerging sectors. Management has guided for credit growth of 13-15% in FY27, underpinned by continued strength in both retail, agriculture and MSME (RAM) lending as well as corporate advances. SBI's diversified loan portfolio and dominant market presence are expected to sustain growth momentum over the coming years.

Market Share Expansion Through Extensive Reach

With more than 22,000 branches and one of the deepest rural banking networks in the country, SBI continues to strengthen its customer base through district-level execution and deeper penetration in underserved regions. The bank aims to improve its market share by around 1% annually across districts by leveraging its vast branch infrastructure, business correspondent network, and digital banking platforms. Rising cross-selling opportunities and efforts to increase products per customer are also expected to boost fee income and enhance customer engagement.

Asset Quality at Historic Highs

SBI's balance sheet continues to strengthen, with asset quality improving further in FY26. Gross non-performing assets (GNPA) and net non-performing assets (NNPA) declined to multi-decade lows of 1.49% and 0.39%, respectively. The corporate loan book saw notable improvement, with corporate GNPA reducing to 0.88% from 1.49% a year earlier. Retail asset quality remained stable, aided by prudent underwriting standards and controlled slippages. Credit costs stayed low at 39 basis points, while provision coverage remained healthy at nearly 75%, providing resilience against potential economic uncertainties.

Robust Capital Position and Potential Value Unlocking

The bank further strengthened its capital base during FY26 by raising Rs 250 billion, resulting in a capital adequacy ratio (CRAR) of 15.4% and a Tier-1 ratio of 13.3%. According to management, the existing capital position is sufficient to support nearly Rs 12 trillion of incremental loan growth. In addition, SBI has potential value-unlocking opportunities through the monetisation of its stake in the National Stock Exchange and the anticipated listing of SBI Asset Management Company, both of which could enhance shareholder value and further strengthen the balance sheet.

Stable Profitability Despite Rate Challenges

Even in a moderating interest rate environment, SBI maintained domestic net interest margins (NIMs) at around 3% and delivered a return on assets (RoA) of 1.1% in FY26. Management remains confident of sustaining an RoA of approximately 1% over the business cycle, supported by stable margins, improving fee income, operating leverage, disciplined liability management, and low credit costs. The bank also expects a smooth transition to the Expected Credit Loss (ECL) framework without any significant impact on growth prospects or capital adequacy.

SBI enters FY27 with strong fundamentals, including healthy capitalisation, best-in-class asset quality, solid growth momentum, and increasing exposure to emerging industries. The brokerage expects the bank to post a FY26-28 earnings trajectory characterised by Credit, Deposit, NII, and Earnings CAGR of 14%, 11%, 15%, and 9%, respectively, while maintaining a sustainable RoA of around 1%.