SBI share price dips after Q3 results 2025. Opportunity to buy?

The share price of State Bank of India (SBI) witnessed 1.58 per cent decline to close at ₹753.95 on Thursday's trading session even after the public sector bank robust results for the December quarter.

SBI, on February 6, posted 84 per cent year-on-year (YoY) jump in its net profit for the quarter ending December 31, 2024, to ₹16,891 crore, surpassing expectations. In the same period last year, the public sector lender's net profit was ₹9,164 crore.

Net interest income (NII) increased by 4 per cent to ₹41,446 crore, compared to ₹39,816 crore in the corresponding period last year. Employee expenses for the bank decreased by 17 per cent to ₹16,074 crore.

SBI's domestic loans experienced a year-on-year growth of 14.06 per cent. The Net Interest Margin (NIM) for the entire bank for the first three quarters of FY25 is 3.12 per cent, while domestic NIM is 3.25 per cent. The Whole Bank NIM for Q3FY25 stands at 3.01 percent, and the Domestic NIM is 3.15 percent.

The lender's asset quality showed positive movement, with the gross NPA ratio decreasing to 2.07 per cent at the end of December 2024, compared to 2.13 per cent at the end of the previous quarter (September 2024). The net NPA ratio remained stable at 0.53 per cent during the same period.

During the reported quarter, the lender's deposits grew by 9.81 per cent to ₹52.3 lakh crore, up from ₹47.62 lakh crore in the same period last year.

“State Bank of India (SBI) posted a robust Q3FY25 net profit of ₹16,891 crore, marking an 84.32% YoY surge from ₹9,164 crore. Operating profit rose 15.81% YoY to ₹23,551 crore. The bank's ROA improved by 42 basis points to 1.04%, with ROE and ROA for 9MFY25 at 21.46% and 1.09%, respectively. Net Interest Income (NII) increased 4.09% YoY to ₹41,446 crore. SBI's credit grew 13.49% YoY, with domestic advances rising 14.06%. Deposits increased 9.81% YoY, while CASA deposits grew 4.46%, bringing the CASA ratio to 39.20%. Whole banks and domestic NIM stood at 3.01% and 3.15%, respectively,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

SBI Q3 results review

Speaking on SBI's Q3FY25 numbers, Abhishek Pandya, Research Analyst at StoxBox, said, “In Q3FY25, State Bank of India, the country's largest public lender, showcased a strong performance driven by steady growth in net interest income, healthy fee income, and relatively lower credit costs compared to its competitors. Loan growth for SBI appears solid, slightly above the industry average, while deposit mobilization matches the industry level, primarily coming from term deposits."

Pandya said management aims to achieve double-digit deposit growth, which is supported by its strong franchise. Although there was a noticeable increase in the cost-to-income ratio, this remains on a downward trend YoY, approaching the management's guidance of 50%. In the previous quarter, the management projected a growth rate of 14-16%, making it essential to monitor any revisions to this guidance after the latest performance.

“As interest rates are expected to decrease, net interest margins may be affected since approximately 40% of loans are tied to the repo rate. However, we anticipate this to be a short-lived impact, as short-term loans can be repriced quickly, potentially mitigating NIM compression. Despite some stress on asset quality, SBI is managing well with lower slippages, credit costs, and non-performing asset (NPA) ratios. Overall, SBI's results align with expectations, and future management insights on margins, credit improvement, and deposit growth will be crucial to watch,” the StoxBox expert added.

Buy or sell?

According to Sumeet Bagadia, Executive Director at Choice Broking, SBI share price has made a strong base at ₹720, and the banking major may rebound from the lower levels.

“If this crucial remains sacrosanct, SBI shares may soon touch the ₹780 and ₹800 apiece mark. So, SBI shareholders are advised to maintain a stop loss at ₹720 and hold the scrip for the abovementioned targets. Likewise, fresh investors can also initially buy momentum at the current market price and continue buying on dips for the short-term target of ₹800. However, they are also advised to maintain a strict stop loss of ₹720,” Bagadia said.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.