Current Rating and Its Significance
MarketsMOJO currently assigns a 'Hold' rating to State Bank of India (SBI), reflecting a balanced outlook on the stock. This rating suggests that investors should maintain their existing positions rather than aggressively buying or selling the shares. The 'Hold' status indicates that while the stock demonstrates solid qualities, certain factors temper its immediate appeal for significant portfolio additions.
The rating was revised on 11 August 2025, when SBI's Mojo Score improved from 48 to 67 points, moving the grade from 'Sell' to 'Hold'. This change was driven by improvements in key performance indicators and market sentiment. Nevertheless, all data and analysis below are based on the latest available information as of 20 January 2026, ensuring investors receive the most relevant insights.
Quality Assessment
As of 20 January 2026, SBI maintains a strong quality grade, reflecting its robust operational and financial health. The bank's lending practices remain prudent, evidenced by a low Gross Non-Performing Assets (NPA) ratio of 1.73%. This indicates effective credit risk management and a relatively healthy loan book compared to peers in the public sector banking space.
Moreover, SBI's net profit has exhibited impressive long-term growth, with an annualised increase of 36.98%. This growth trajectory underscores the bank's ability to expand its core business and generate shareholder value over time. However, recent quarterly results show some softness, with Profit Before Tax (excluding other income) declining by 30.81%, signalling some near-term challenges.
Valuation Considerations
Despite its quality credentials, SBI's valuation is currently considered expensive. The stock trades at a Price to Book Value (P/BV) ratio of 1.8, which is on the higher side relative to its historical averages and some sector peers. This elevated valuation reflects investor confidence in the bank's market position but also suggests limited upside from a price perspective in the near term.
Nevertheless, the stock's valuation appears fair when compared to the broader banking sector, given SBI's dominant market share and scale. The bank's market capitalisation stands at ₹9,58,323 crores, making it the largest entity in the public sector banking sector and accounting for 46.49% of the sector's total market value.
Financial Trend Analysis
The financial trend for SBI is currently flat, indicating stability but limited momentum in recent quarters. While the bank's net profit growth remains strong over the long term, the latest quarterly figures reveal a decline in core operating profit, partly offset by significant non-operating income, which constitutes 75.15% of Profit Before Tax. This reliance on non-operating income may raise questions about the sustainability of earnings in the short term.
Additionally, the bank's Return on Assets (ROA) stands at 1%, which is respectable but not exceptional. This metric, combined with flat recent financial trends, supports a cautious stance on the stock's near-term earnings potential.
Technical Outlook
From a technical perspective, SBI exhibits a bullish trend. The stock has delivered strong returns across multiple time frames as of 20 January 2026, including a 34.03% gain over the past year and a 26.82% increase over six months. Shorter-term performance is also positive, with a 6.53% rise in the last month and a 1.53% gain over the past week.
This upward momentum suggests continued investor interest and confidence in the stock's price action, which may provide support against downside risks. The stock's day change on the latest trading session was +0.57%, reflecting steady buying interest.
Market Position and Institutional Confidence
SBI's dominant market position is reinforced by its substantial market capitalisation and sales figures. The bank's annual sales total ₹4,74,742.62 crores, representing 37.39% of the public sector banking industry's revenue. This scale advantage provides SBI with competitive leverage and resilience in a challenging banking environment.
Institutional investors hold a significant 37.37% stake in SBI, signalling strong confidence from sophisticated market participants. These investors typically have greater resources and expertise to analyse company fundamentals, lending credibility to the stock's current valuation and outlook.
Summary for Investors
In summary, State Bank of India’s 'Hold' rating by MarketsMOJO reflects a nuanced view of the stock. The bank's strong quality metrics and market leadership are balanced by an expensive valuation and flat recent financial trends. The bullish technical outlook and solid institutional backing provide some reassurance for investors holding the stock.
For investors, this rating suggests maintaining current holdings while monitoring upcoming financial results and market developments. The stock’s strong long-term growth potential remains intact, but near-term earnings volatility and valuation considerations warrant a cautious approach.
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Performance Highlights
The latest data as of 20 January 2026 shows that SBI has outperformed the broader market indices consistently. Over the past year, the stock has generated a return of 34.03%, significantly surpassing the BSE500 index and many of its banking peers. This market-beating performance extends to shorter time frames as well, with gains of 15.14% over three months and 6.31% year-to-date.
Such returns underscore the stock’s appeal to investors seeking exposure to a large-cap public sector bank with a strong franchise and growth prospects. However, the flat financial trend and elevated valuation suggest that investors should weigh the potential for further price appreciation against the risks of earnings volatility.
Outlook and Considerations
Looking ahead, SBI’s ability to sustain its growth momentum will depend on several factors, including credit quality, interest rate environment, and macroeconomic conditions. The bank’s low Gross NPA ratio and strong lending practices provide a solid foundation, but the recent dip in core operating profit highlights the need for cautious monitoring.
Investors should also consider the stock’s valuation in the context of sector dynamics and broader market trends. While the current Price to Book Value ratio suggests a premium, SBI’s dominant market share and institutional backing may justify this level for investors with a medium to long-term horizon.
Overall, the 'Hold' rating reflects a balanced view that recognises both the strengths and challenges facing State Bank of India in the current market environment.
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