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SBI dips 3% on profit booking on fund raising plan; should you buy or hold?
SBI's board, at a meeting scheduled for May 3, 2025, is expected to discuss and approve the proposal for raising equity during FY26.
Mumbai
State Bank of India (SBI) share price today: Shares of State Bank of India (SBI) dipped 3 per cent to ₹784.45 on the BSE in Wednesday's intra-day trade on profit booking after the country's largest bank announced that it is planning to raise equity capital in the current financial year to support business growth.
Since March 1, 2025, from the level of ₹688.25, the stock price of SBI has appreciated by 18 per cent to ₹811.75 on Tuesday, April 29, 2025. SBI's share price had hit its highest level of calendar year 2025, of ₹835.45 on April 22.
Board meeting on May 3, 2025 The board, scheduled to meet on May 3, 2025, is expected to discuss and approve the proposal for raising equity during FY26. The capital raising could be through a Follow-on Public Offer (FPO), Rights Issue, Qualified Institutional Placement (QIP), or any other mode or combination of these, as may be decided at the opportune time or as may be approved by the Government of India (GoI)/ Reserve Bank of India (RBI), SBI informed the BSE.
During the financial year 2017-18 (FY18), SBI raised ₹15,000 crore of equity through QIP, which was the largest ever in India and the third largest in Asia-Pacific at the time. The Government, in turn, had infused ₹8,800 crore, SBI said in its FY18 annual report.
S&P Global Ratings affirms credit rating of SBI
SBI is the largest bank in India with a significant geographic and product diversity. India's good growth prospects will also support its loan growth, asset quality, and profitability. SBI's strong deposit franchise will also underpin its credit standing.
The rating agency forecasts SBI's ratio of nonperforming and restructured loans will stay at 2.5 per cent-3.0 per cent over the next 12-18 months, versus 2.4 per cent as of December 31, 2024. Credit costs will likely remain under 1 per cent over the forecast period. In S&P Global Ratings' opinion, SBI can absorb a moderate rise in credit stress from unsecured retail and microfinance loans.
Expect the public sector bank to maintain its market leadership in India's banking sector over the next two years. SBI's funding and liquidity should stay strong, supported by high customer confidence. SBI's asset quality is expected to remain better than the sector average in India and comparable with that of similar rated international peers. The bank's capitalisation is likely to stay weaker than that of India's private sector banks.
Brokerage view – Mirae Asset Sharekhan
Remain constructive on SBI given its well positioned balance sheet to capitalise growth and strong subsidiary performance. Net interest margins (NIMs) are expected to be broadly stable across cycles. Do not expect any further deterioration in cost structure from here on, barring adjustments to interest rate changes. There are no concerns on asset quality and expect the bank to deliver healthy return ratios in the medium term. Maintain Buy rating on SBI with an unchanged price target of ₹980.
About SBI
SBI is the largest public-sector bank in terms of assets, deposits, branches, number of customers, and employees having a pan-India presence. The bank has been designated by the RBI as a domestic systemically important bank (D-SIB), which means that its continued functioning is critical for the economy. The bank is well-placed to gain market share, driven by strong balance sheet strength.
SBI enjoys a dominant position and market share in the Indian banking sector. SBI has a strong presence in both retail liabilities as well as retail asset side along with its corporate relationships (due to size, history, and market knowledge), which are key differentiators for it.
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