India's banking behemoth, the State Bank of India (SBI), is charting a course for one of its most powerful performances in recent years. The lender's shares have skyrocketed by nearly 25% in 2025 so far, decisively outperforming all its major private-sector rivals on the Nifty index. This surge marks a significant shift in momentum for the public sector giant.
Drivers of the Impressive Rally
After a modest 5% increase in 2023 and a solid 23% gain in 2024, this year's advance sets SBI up for a fifth straight year of positive returns, its best run in two years. Analysts attribute this stellar performance to a confluence of positive factors. A favourable earnings outlook, consistently improving asset quality, and expectations of steady credit growth are the primary engines. SBI is also reaping the benefits of its status as a dominant institution with a vast and loyal investor base, emerging stronger in a stable macroeconomic environment with evolving interest rate expectations.
The demand for credit in the economy remains robust, and the recent reduction in GST rates is anticipated to give consumption a further boost. This aligns with the Reserve Bank of India's GDP growth projections of 6.8% for FY26 and 6.6% for FY27, creating a supportive backdrop for banks. Systemic loan growth in the second half of FY26 is estimated to be between 11% and 12%.
Solid Fundamentals and Structural Advantages
SBI's financial foundations are rock-solid. In the September quarter, the bank's net interest margins expanded by 7 basis points sequentially, thanks to better deposit repricing and adept liability management. The bank maintains a strong Current Account and Savings Account (CASA) ratio of 36.9%. It commands a formidable market share of over 22% in total deposits and approximately 23% in low-cost CASA deposits.
This balance-sheet strength and premier deposit franchise lead analysts to believe SBI will grow faster than the broader industry while protecting its valuable low-cost deposit base. Parag Thakkar of Fort Capital highlighted SBI's immense scale, noting its Rs 43 lakh crore loan book constitutes nearly 23–24% of India's total, all while maintaining a credit cost of just 50 basis points and growing at 12–14%.
Thakkar estimates SBI's FY27 earnings per share at Rs 85 and book value at Rs 585, implying the stock trades at a reasonable 1.1 times book value. He suggests a price target of Rs 1,150 within a year "can't be ruled out." Domestic brokerage ICICI Securities pointed to the bank's 25% year-on-year core fee income growth, driven by volumes rather than one-off events—a trend expected to continue.
Overwhelmingly Bullish Analyst Sentiment
The optimism surrounding SBI is widespread across brokerages. CLSA reiterated its 'Accumulate' rating post the quarterly results, raising its target price to Rs 1,170, indicating a nearly 20% upside from current levels. Axis Securities maintains a 'Buy' call, citing no visible headwinds for growth or asset quality and raising its FY26 Net Interest Income (NII) estimates by 3%.
Global players are equally positive. HSBC upgraded its valuation outlook with a revised target price of Rs 1,110. Nomura expects SBI to deliver a Return on Assets (RoA) and Return on Equity (RoE) of 1.1% and 16%, respectively, through FY27–28. Both firms see potential for further stock re-rating as the bank's profitability strengthens.
Even after this sharp appreciation, analysts believe SBI is entering a new phase of its growth cycle, supported by multiple tailwinds that promise better margins, robust loan growth, and healthy asset quality. With earnings visibility becoming clearer, India's largest lender is expected to remain a top choice for long-term investors. While some near-term consolidation is possible, market experts view any correction as an attractive buying opportunity, keeping the sentiment decisively upbeat as 2026 approaches.
