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The market expects State Bank of India to carry on much as it has.
At today’s share price, buyers are assuming State Bank of India earns about 14.8% a year on the money invested in it, from here on. Over the last ten years it actually earned about 16.1% a year. The two are close, so the share price does not need the business to improve or to stumble. It needs it to keep doing roughly what it already does.
- How it is valued: Excess return — the correct lens for a bank.
- What the price assumes: 14.8% return on equity, against 16.1% the model takes from its own record.
- Ten-year record: Between FY2019 and FY2026, State Bank of India's revenue went from ₹3,30,221 crore to ₹7,09,617 crore — it compounded at about 12% a year over 7 years.
- Biggest swing factor: Return on equity versus its own history. Main risk: A turn in corporate credit.
01The bank the whole country runs on
State Bank of India is the country's largest bank by deposits, loans, branches and customers, and it is majority-owned by the Government of India. It lends to everyone from farmers and home buyers to the largest corporates, and its group includes SBI Life, SBI Card, the SBI Mutual Fund asset manager and SBI General Insurance.
For much of the 2010s SBI's profits were swallowed by bad loans to large companies. After the clean-up, recoveries and a growing retail book lifted returns to levels a public-sector bank had rarely reached.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the return on equity that price implies for State Bank of India, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03State Bank of India's record, in plain numbers
Between FY2019 and FY2026, State Bank of India's revenue went from ₹3,30,221 crore to ₹7,09,617 crore — it compounded at about 12% a year over 7 years. Net profit grew from ₹3,069 crore to ₹85,168 crore, about 61% a year — faster than revenue, so margins widened. In FY2026 it kept 12.0% of revenue as net profit — its best year in the period. The latest year added 7.0% to revenue, well behind its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2019 | 3,30,221 | 3,069 | 0.9% |
| FY2020 | 3,62,229 | 18,177 | 5.0% |
| FY2021 | 3,83,971 | 24,280 | 6.3% |
| FY2022 | 4,06,973 | 36,356 | 8.9% |
| FY2023 | 4,73,378 | 56,558 | 11.9% |
| FY2024 | 5,94,575 | 68,138 | 11.5% |
| FY2025 | 6,63,343 | 79,017 | 11.9% |
| FY2026 | 7,09,617 | 85,168 | 12.0% |
04How State Bank of India gets valued — and why
Excess return — the correct lens for a bankA bank is not valued with a discounted cash flow. Deposits are its raw material and interest is operating income, so enterprise value means nothing here. It is valued on excess return instead — the profit it earns above the cost of the equity funding it.
05What decides State Bank of India's value
Return on equity versus its own history
SBI's value depends on whether recent returns hold through a full credit cycle — something it has not shown before.
Credit costs
Because the book is so large, even a modest rise in fresh bad loans would show up quickly in profit.
The subsidiaries
SBI Life, SBI Card and the fund manager are each valuable on their own, and the market's view of them moves SBI's value.
Policy priorities
As a state bank, lending mandates and rate pass-through can matter more for SBI than for private peers.
06What could go wrong
- A turn in corporate credit. SBI's history shows how fast large-company defaults can erase years of profit.
- Staff and pension costs. Wage settlements at a public-sector bank are less flexible and can lift costs in step.
- Capital for growth. Faster lending needs capital; if retained profit is not enough, raising equity dilutes existing holders.
07What the full SBI valuation shows
Sign in free to see the complete State Bank of India valuation
- ✓Fair value per share — from the excess-return model banks are valued on
- ✓The bank workpaper — book value, cost of equity and sustainable return, step by step
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against HDFC Bank, ICICI Bank and Bank of Baroda
- ✓Downloadable report — the full write-up, yours to keep
08Compare State Bank of India with peers
The same valuation, run side by side.
State Bank of India vs HDFC BankPublic sector scale against the largest private bank.→State Bank of India vs ICICI BankThe private-sector comparison, on the same excess-return model.→State Bank of India vs Bank of BarodaThe nearest public-sector peer.→State Bank of India vs Bajaj FinanceA deposit-funded state bank against a lender that has no deposits at all.→09Questions people ask about State Bank of India
Why does SBI trade at a lower price-to-book than private banks?
Historically SBI has earned lower and more volatile returns on equity, and investors also price in government ownership and policy lending. Price-to-book only means something next to return on equity — which is how the excess-return model values it.
Is SBI's profit sustainable?
That is the core question. The reverse-solved return on this page shows what the market already assumes; the bank workpaper shows the return the model thinks the book can sustain.
How does SBI compare with HDFC Bank?
Both are valued on the same excess-return model, so they can be compared directly. The comparison page puts them side by side on price, returns and what each share price assumes.
Is State Bank of India overvalued?
At ₹1,080 the market is pricing in roughly 14.8% sustained ROE, against the ~16.1% its own record supports. That is less than it has delivered — on these numbers the market is asking the business for less than its own record, which usually means it doubts the record repeats.
What is the intrinsic value of State Bank of India?
It is computed from the filed financial statements using the method that fits this business (excess return), with every assumption shown alongside the result. The per-share figure and the full working are in the report.
How much debt does State Bank of India carry?
Debt to equity stands at 1.27, down from 1.49 at the start of the period — the balance sheet is a core input to the cost of capital used here.