SBI Stock Volatile After Q1 Results: Shares Give Up Early Gains Despite Strong Earnings, Brokerages Remain Bullish

State Bank of India (SBI) shares turned volatile in early trading on Monday after initially gaining following the public sector lender’s stronger-than-expected June-quarter performance. The stock had opened with positive momentum after SBI delivered a solid Q1 FY27 earnings report, but selling pressure later emerged, highlighting the cautious mood in the broader market even as analysts remained optimistic about the bank’s fundamentals.

SBI’s April-June quarter results provided several reasons for investors to remain constructive. The bank reported a 10.2% year-on-year increase in net profit to ₹21,121 crore, comfortably ahead of market expectations. Net interest income, a key measure of a bank’s core lending performance, increased 15% to ₹46,992 crore. The performance also exceeded the estimates tracked ahead of the results.

The earnings improvement was supported by continued expansion in the loan book. SBI’s gross advances grew 18.6% from a year earlier, with growth spread across several major business segments. Domestic advances increased 18.15%, while corporate lending rose 18.05%. Retail personal loans expanded 15.15%, and stronger growth was recorded in the SME and agriculture portfolios.

Margins show signs of recovery

One of the most closely watched elements of SBI’s results was the movement in net interest margins. The domestic NIM reached 3%, while the bank’s overall NIM improved sequentially to 2.86%.

The improvement was important because margins had been a key concern for investors across the banking sector. According to CLSA, SBI’s domestic NIM increased by seven basis points sequentially, broadly consistent with the lender’s full-year guidance. The brokerage also noted that net interest income was ahead of its estimates.

The combination of stronger lending and better margins helped improve the bank’s underlying operating performance. CLSA said SBI delivered a broad-based quarterly performance, with higher fee income and controlled operating expenses contributing to a significant beat in core pre-provision operating profit.

Asset quality remains a major positive

SBI also continued to show improvement in asset quality. Gross non-performing assets declined to 1.47% from 1.49% in the previous quarter, while the net NPA ratio eased to 0.38% from 0.39%.

Although provisions increased during the quarter and fresh slippages rose sequentially, the overall credit-cost picture remained relatively contained. Credit cost was unchanged sequentially at 0.27% and was substantially lower than the year-earlier level of 0.47%.

CLSA pointed to the improvement in asset quality as another reason for its positive assessment. The brokerage highlighted the lower slippage ratio and raised its profit estimates for SBI for FY27 through FY29, citing stronger net interest income and expectations of lower provisions.

Brokerages see further upside

The positive quarterly numbers have prompted brokerages to remain constructive on SBI. CLSA retained its Outperform rating and raised its target price to ₹1,325 per share. The brokerage expects the bank’s earnings profile to benefit from stronger NII and improving provisions.

Motilal Oswal has also retained a Buy recommendation and set a target price of ₹1,370, while maintaining its view that SBI can deliver loan growth in the 14-15% range.

The market response, however, has not been entirely one-directional. After the initial post-results optimism, SBI shares came under pressure during Monday’s session. Such price movement suggests that investors are balancing the strong fundamental picture against broader market conditions and profit-taking after the stock’s recent gains.

SBI has already outperformed the benchmark significantly in 2026. According to Moneycontrol, the stock was up 11.4% so far this year, while the Nifty 50 had declined about 6% over the same period. SBI’s market capitalisation was around ₹10.13 lakh crore during early trading.

With loan growth remaining robust, margins showing improvement and asset quality holding up, the June-quarter results have strengthened the investment case for SBI in the eyes of several brokerages. The key question for investors now will be whether the bank can sustain this combination of credit expansion and margin recovery through the remaining quarters of FY27.