SBI gains 2% as Jefferies’ “buy” rating hints at 29% upside

State Bank of India (SBI) shares climbed 2% to ₹799 on November 22, snapping a two-day losing streak. This surge followed Jefferies' reaffirmation of its "buy" rating on SBI, with a mark price of ₹1,030, implying a significant 29% upside. For investors looking to invest in stocks, this highlights SBI as a strong contender within the banking sector.

Positive outlook backed by stable asset quality

Jefferies identified SBI as its top pick, citing a robust loan-to-deposit ratio (LDR) as deposit mobilisation strengthens. The bank's management has projected credit growth of 14–16% and deposit growth of 10–11% in the near term. Moreover, SBI's asset quality remains resilient, including in its unsecured portfolio. This stability offers a reliable option for those aiming to invest in stocks in sectors with minimal risk exposure.

Financial performance and key metrics

SBI posted a stellar 28% YoY increase in Q2FY25 standalone net profit, reaching ₹18,331.4 crore. While net interest income grew 5.3% YoY to ₹41,620 crore, net NPAs declined by 5% sequentially, underscoring the bank's robust financial health. Additionally, Jefferies expects SBI's margins to improve, thanks to its MCLR-linked loans, despite challenges such as a slight dip in net interest margins to 3.27%. For those seeking to invest in stocks with growth potential, these metrics underline SBI's promising outlook.

Key takeaways

• SBI's upside potential: Jefferies sees a 29% growth opportunity with a ₹1,030 price target.
• Strong fundamentals: Stable asset quality and healthy credit growth guidance.
• Sector leader: An ideal pick for investors looking to capitalise on robust financials and steady growth.