Shares of country's largest lender State Bank of India (SBI) tanked 11% in two sessions after the bank reported Q4 earnings that missed street expectations. Worries over margin pressure dented sentiment on the Dalal Street. The large cap stock sinked 10.71% in two sessions after Q4 and FY26 earnings were announced on May 8. SBI reported a 6% rise in Q4 net profit. Standalone net profit in the March quarter grew to Rs 19,684 crore compared with Rs 18,643 crore a year earlier. 

Net interest income (NII)-- the difference between interest earned and interest paid -- grew 4.1 percent year-on-year to Rs 44,380 crore in Q4 against Rs 42,618 crore a year ago. NII missed market expectations. 

Margins also fell in Q4. SBI’s whole-bank net interest margin (NIM) came at 2.81 percent for Q4FY26, while domestic NIM came in at 2.93 percent. NIMs stood at 3.11 percent in the previous quarter and 3.14 percent a year ago.

Axis Securities said the bank's NII and preprovisoning operating profit missed estimates.     

The brokerage trimmed its price target to Rs 1285 per share from the earlier Rs 1250 per share. The fresh target price signals a 26% upside from the CMP of Rs 1012, said Axis.  

The brokerage said for FY27, management has guided for 13-15% credit growth, primarily led by the RAM segment and corporate growth sustaining at 12-13%.

The brokerage expects SBI’s strong credit growth delivery to continue, thereby  delivering advances growth of 14% CAGR over FY26-28E.

"At present, we do not see downside risks to a comfortable, sustained RoA delivery of more than 1% over the medium term. SBI remains our favoured pick amongst the larger banks," said Axis Securities. 

However, it cited a slowdown in systemic credit growth and higher than expected impact of ECL transition as key risks to its estimates and TP. 

Brokerage JM Financial in its Q4 review report said margins fell below estimates but maintained  its bullish stance on the banking stock. 

"We retain our  long-term BUY and Mar-27E TP of Rs1,225, now valuing the standalone bank at 1.3x FY28E ABV and subsidiaries/investments at Rs 322/share," said JM Financial said.  

Motilal Oswal expects a 28% upside with a price target of Rs 1,300 on the SBI stock. But the brokerage trimmed its earnings estimates by 3%/5% for FY27/FY28 and expect FY27E RoA/RoE at 1%/ 15.3%. 

The brokerage said SBI reported a mixed quarter, affected by a decline in NII and NIM contraction due to repo rate transmission, MCLR cuts, and migration of select corporate loans from MCLR linked to T-bill.