State Bank of India is Rated Hold by MarketsMOJO

Rating Overview and Context

On 11 August 2025, MarketsMOJO revised the rating for State Bank of India (SBI) from 'Sell' to 'Hold', accompanied by a significant improvement in its Mojo Score, which rose by 19 points from 48 to 67. This shift reflects a more balanced view of the stock’s prospects, signalling neither a strong buy nor a sell recommendation but rather a cautious stance that recognises both strengths and challenges in the current market environment.

It is important to note that while the rating change occurred in August 2025, all financial data, returns, and fundamental assessments presented here are based on the latest available information as of 09 January 2026. This ensures that investors receive a current and comprehensive evaluation of SBI’s standing.

Quality Assessment: Strong Lending Practices and Growth

As of 09 January 2026, SBI maintains a good quality grade, underpinned by its robust lending practices and asset quality. The bank’s Gross Non-Performing Asset (NPA) ratio stands at a low 1.73%, indicating effective risk management and credit discipline. This is a critical metric for public sector banks, where asset quality often dictates long-term sustainability.

Moreover, the company has demonstrated healthy long-term growth, with net profit expanding at an annualised rate of 36.98%. This growth trajectory highlights SBI’s ability to generate consistent earnings despite the challenging macroeconomic environment. However, recent quarterly results show some softness, with Profit Before Tax (PBT) excluding other income falling by 30.81% to ₹6,585.26 crore in September 2025. Non-operating income constitutes a substantial 75.15% of PBT, suggesting that core operations face some pressure.

Valuation: Expensive but Justified by Market Position

Currently, SBI’s valuation is considered expensive, trading at a Price to Book Value (P/BV) of 1.8. While this is above the average for many peers, it is justified by the bank’s dominant market position and strong fundamentals. SBI commands a market capitalisation of approximately ₹9,20,293 crore, making it the largest entity in the public sector banking space and representing 46.37% of the sector’s total market cap.

The stock’s valuation also reflects its sizeable contribution to the industry, with annual sales of ₹4,74,742.62 crore accounting for 37.43% of the sector. Despite the premium, the stock’s price performance has been robust, delivering a 32.04% return over the past year as of 09 January 2026, outperforming broader indices such as the BSE500 over multiple time frames.

Financial Trend: Flat Recent Performance Amid Long-Term Strength

The financial trend for SBI is currently flat, reflecting a mixed picture. While long-term profit growth remains strong, recent quarterly results indicate some stagnation in core earnings. The flat trend is evident in the September 2025 quarter, where core PBT declined sharply, offset by significant non-operating income. This suggests that while the bank’s underlying business faces headwinds, other income sources have helped stabilise overall profitability.

Institutional investors hold a significant 37.37% stake in SBI, signalling confidence from sophisticated market participants who typically conduct thorough fundamental analysis. This institutional backing provides a degree of stability and suggests that the stock’s current valuation and performance are well understood by the market.

Technical Outlook: Bullish Momentum Supports Hold Rating

From a technical perspective, SBI exhibits a bullish trend. The stock has shown consistent upward momentum, with short-term gains of 0.61% on the latest trading day and a 6-month return of 23.81%. The 3-month return of 16.45% and 1-month gain of 4.65% further reinforce the positive technical sentiment.

This bullish technical grade supports the 'Hold' rating by indicating that while the stock is not a strong buy at current levels, it continues to demonstrate resilience and upward price movement, making it a viable option for investors seeking steady exposure to the public sector banking sector.

Here's How the Stock Looks Today

As of 09 January 2026, State Bank of India presents a balanced investment case. Its strong asset quality, sizeable market share, and solid long-term profit growth underpin its fundamental strength. However, the expensive valuation and recent flat financial trends temper enthusiasm, suggesting that investors should approach the stock with measured expectations.

The stock’s market-beating performance over the past year and positive technical indicators provide additional support for maintaining a 'Hold' stance. This rating implies that investors may consider retaining their positions but should be cautious about initiating new, large exposures until clearer signs of sustained earnings growth emerge.

Investor Takeaway

For investors, the 'Hold' rating on State Bank of India signals a stock that is fundamentally sound but currently fairly valued with some near-term earnings uncertainties. The bank’s dominant position in the public sector banking landscape and strong institutional support make it a core holding for those seeking exposure to India’s financial sector.

However, the expensive valuation and recent flat financial trends suggest that investors should monitor upcoming quarterly results closely for signs of renewed profit momentum. The technical bullishness offers some reassurance that the stock price may continue to trend upwards, but caution is warranted given the mixed signals from the financials.

Overall, SBI remains a key player with a solid foundation, but the 'Hold' rating advises investors to maintain current holdings rather than aggressively accumulate at this stage.

Company Profile and Market Position

State Bank of India is the largest public sector bank in India, with a market capitalisation of ₹9,20,293 crore as of 09 January 2026. It constitutes nearly half (46.37%) of the entire public sector banking sector’s market cap, underscoring its dominant role. The bank’s annual sales of ₹4,74,742.62 crore represent 37.43% of the sector, highlighting its scale and influence.

Its strong lending practices and low Gross NPA ratio of 1.73% reflect prudent credit management, a critical factor for investors assessing risk in the banking sector. The bank’s ability to generate consistent net profit growth at an annualised rate of 36.98% over the long term further reinforces its quality credentials.

Stock Performance and Returns

As of 09 January 2026, SBI has delivered impressive returns across multiple time frames. The stock has gained 32.04% over the past year, outperforming the BSE500 index and many sector peers. Shorter-term returns are also strong, with 6-month gains of 23.81%, 3-month returns of 16.45%, and a 1-month increase of 4.65%. Year-to-date, the stock has risen by 2.21%, reflecting continued investor interest.

This market-beating performance, combined with a bullish technical outlook, supports the current 'Hold' rating by indicating that the stock remains attractive but is not undervalued enough to warrant a 'Buy' recommendation at present.

Conclusion

State Bank of India’s 'Hold' rating by MarketsMOJO, last updated on 11 August 2025, reflects a nuanced view of the stock’s prospects. As of 09 January 2026, the bank’s strong fundamentals, dominant market position, and positive technical momentum are balanced by an expensive valuation and flat recent financial trends.

For investors, this means SBI is a reliable core holding with solid long-term growth potential, but caution is advised given the current valuation and earnings outlook. Monitoring upcoming financial results and market developments will be key to reassessing the stock’s attractiveness in the near future.

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