State Bank of India (SBI) shares gained over 2% in early trading on Monday after the lender delivered stronger-than-expected earnings for the first quarter of FY26. The stock opened at ₹807, up from its previous close of ₹804.55, and touched an intraday high of ₹822.85 in morning deals. The rally followed the announcement of a standalone net profit of ₹19,160 crore for the June quarter, marking an increase from ₹17,035 crore in the same period last year and significantly surpassing market expectations of ₹17,095 crore.
The bank’s interest income for Q1FY26 rose 6% to ₹1,17,996 crore compared with ₹1,11,526 crore a year earlier. Brokerage houses reacted positively to the results, pointing to the bank’s earnings strength despite some margin pressure. Motilal Oswal Financial Services (MOFSL) noted that profits exceeded its forecast by 13%, driven by strong treasury gains and well-managed operating expenses. However, it also flagged that net interest income (NII) fell 4% sequentially, while the net interest margin (NIM) slipped 10 basis points quarter-on-quarter and 32 basis points year-on-year to 2.9%. Management remains confident that domestic NIMs will stay above 3% in FY26 and are likely to recover from the third quarter.
MOFSL highlighted SBI’s steady performance despite seasonal slippages in the first quarter. Credit growth stood at 12% year-on-year, with the unsecured Xpress Credit portfolio holding steady. A robust credit pipeline, combined with a healthy domestic credit-deposit ratio, is expected to sustain lending momentum in the coming quarters. Based on the Q1 performance, MOFSL has revised its earnings projections upward by 3% for FY26 and 3.5% for FY27, reiterating its “buy” recommendation with a target price of ₹925.
Other brokerages expressed similar optimism. Nuvama maintained its “buy” rating with a target price of ₹950, while JM Financial also reiterated a “buy” call with the same target. Analysts pointed to expected improvements in liquidity conditions, moderation in deposit costs, and the advantages of SBI’s recent capital raising as factors that could bolster the bank’s financial performance going forward. Overall, market sentiment remains positive, with the consensus view that SBI is well positioned to deliver sustained earnings growth over the medium term.
