SBI shares get two downgrades after Q4 results miss but no analysts says 'sell'

India's largest lender State Bank of India Ltd. (SBI) was downgraded by two brokerage firms, Nomura and IIFL, after its results for the March quarter missed analyst expectations. Despite the downgrade, none of the 50 analysts that have coverage on the stock, have a "sell" rating on it.

State Bank of India's core income for the March quarter missed analyst expectations, while slippages also rose on a sequential basis. The stock ended with losses of close to 7% on Friday.

Nomura Downgrades On Weak Operating Performance

Nomura downgraded SBI to "neutral" from its earlier rating of "buy" and trimmed its price target to ₹1,140 from ₹1,205 earlier.

The brokerage said that higher sustainable credit costs on transition to new ECL norms may pose a risk to the lender's Return on Assets (RoA) trajectory.

SBI currently trades at 1.2 times its financial year 2028 estimated book-value-per-share and therefore, it does not expect any material re-rating from current levels.

The lower multiples are a reflection of Nomura's concerns on the sustainability of SBI's Return on Equity (RoE), the brokerage said, adding that while the management maintained its Net Interest Margin (NIM) guidance of 3%, it expects them to remain under pressure in the near-term.

IIFL Downgrades On Weak Earnings Outlook

IIFL has also downgraded SBI to "Add" from its earlier rating of "Buy" and cut its price target to ₹1,140 from ₹1,230 earlier.

The brokerage anticipates a 13% Compounded Annual Growth Rate (CAGR) for SBI's advances and expect margins to improve by seven basis points over financial year 2026-2028. It also expects average credit costs of 50 basis points over financial year 2027-2028 from 40 earlier.

A lower Net Interest Income led to the brokerage downgrading the stock and expects SBI's Earnings Per Share (EPS) to grow only at a 7% CAGR over financial year 2026-2028. This is in comparison to 11% to 20% growth projected for its private peers. As a result, IIFL has also cut SBI's earnings growth estimates by 4% and target multiple to 1.2 times.

50 analysts have coverage on SBI, of which 43 have a "buy" rating and the rest have a "hold" recommendation.

Shares of State Bank of India ended 6.7% lower on Friday at ₹1,018.4. The stock is still up 3.5% so far this year.