Sbi shares fall 10% in 2 days, brokerages downgrade stock

Shares of State Bank of India (SBI) extended losses for a second straight session on Monday, falling another 4% after brokerages turned cautious following the lender’s weaker-than-expected Q4 FY26 results.

The stock slipped to around ₹982 on the NSE during early trade after already falling more than 7% on Friday following the earnings announcement. The decline has wiped out over 10% from SBI’s market value in just two trading sessions.

Brokerages highlighted pressure on net interest margins (NIMs), weaker operating profit growth and rising slippages as key concerns, even as the bank maintained constructive guidance for FY27.

SBI reported a standalone net profit of ₹19,683.7 crore for Q4 FY26, up 5.6% year-on-year and slightly above analyst estimates of around ₹19,500 crore. However, net interest income (NII) rose just 4.1% YoY to ₹44,380 crore, missing Street estimates of around ₹46,500 crore.

Operating profit declined around 10% year-on-year, marking the steepest fall in nine quarters. Whole bank NIM stood at 2.91% against 2.99% in the previous quarter, while domestic NIM declined to 3.03% from 3.12% sequentially.

Brokerages said the margin miss was the key disappointment in the quarter. According to management, NIM pressure was driven by policy rate cuts and a sharp increase in corporate loan drawdowns during the quarter.

Despite the weak quarter, management reiterated confidence in sustaining around 3% NIM in FY27 through asset-side pricing measures. The bank also guided for 13-15% loan growth, credit costs of around 50 basis points, cost-to-income ratio below 50%, return on assets of around 1% and through-the-cycle return on equity of approximately 15%.

The bank added that the transition to Expected Credit Loss (ECL) norms is expected to be less disruptive, providing earnings visibility going forward.

Multiple brokerages downgraded the stock or cut target prices after the results, citing weaker core profitability and margin pressure. Analysts also flagged concerns around slippages and moderating return ratios despite healthy balance sheet growth.

At the same time, some analysts noted that SBI’s valuations remain attractive, with the stock trading at around 1.5x FY28 estimated price-to-book value. Deposits grew 10% year-on-year during the quarter, while advances rose 17%, marking the best loan growth in 13 quarters.

Asset quality remained stable, with gross NPA improving to 1.49% and net NPA remaining flat at 0.39%.

Despite the sharp correction, analysts remain divided on the stock’s outlook, with investors closely tracking whether margin pressures ease over the coming quarters.