🧵 At a Glance
India’s largest bank by deposits and advances, State Bank of India, is clocking all-time high profits with ₹80,500 Cr PAT in FY25. Yet, it trades at a P/E of just 9.2. Is this a PSU discount or a multibagger dividend machine waiting to break free?
🏦 1. India’s Banker-in-Chief
- SBI is not a bank, it’s practically a financial republic. With over ₹7.3 lakh crore in market cap and a 22.5% deposit share in India, it’s the daddy of all lenders.
- If Indian banking is the IPL, SBI is Mumbai Indians – legacy, trophies, but occasionally scandal-prone.
Key Stats (FY25):
| Metric | Value |
|---|---|
| Net Profit | ₹80,523 Cr |
| ROE | 17% |
| Gross NPA | 2.13% |
| Net NPA | 0.52% |
| Dividend Yield | 1.99% |
| EPS | ₹86.91 |
📈 2. From “Government Job Bank” to Profit Factory
SBI’s 5-year CAGR for net profit is a stunning 36%. Yes, this is not a typo. The PSU bank that once ran on chai and chits now churns out quarterly profits above ₹20,000 Cr.
🤑 Quarterly Profit Party
| Quarter | Net Profit (₹ Cr) |
|---|---|
| Mar ’24 | 22,203 |
| Jun ’24 | 20,094 |
| Dec ’24 | 19,484 |
| Mar ’25 | 20,379 |
- Every quarter, SBI makes more than the market cap of some mid-cap banks.
- Profitability is not being faked via “other income” anymore – it’s real, recurring, and resilient.
💸 3. SBI’s Secret Weapon: Other Income 🧙♂️
- In FY25, SBI booked ₹1.72 lakh crore in other income – nearly 35% of its total income.
- Where is this money coming from? Treasury ops, fee-based income, Jio Payments Bank divestment, and asset recoveries.
- That’s both good (diversified streams) and risky (dependence on market gains).
⚠️ 4. Contingent Liability: SBI’s ₹27 Lakh Cr Problem
Yes, ₹27,42,584 Cr. That’s the size of SBI’s contingent liabilities. It includes:
- Guarantees
- Letters of credit
- Derivative exposures
➡️ That’s nearly 4x India’s FY25 Budget deficit.
But relax. It’s not as scary as it sounds. These aren’t defaults – just liabilities that could arise under specific conditions. Still, it’s a sleeping dragon.
🧮 5. Valuation: PSU Discount or Hidden Gem?
Let’s run a back-of-the-dal-chawal valuation:
🧾 EduInvesting FV Range
- EPS (FY25): ₹86.91
- Fair P/E Range: 10x (conservative PSU) to 12x (growth + RoE premium)
- 🎯 FV Range: ₹869 – ₹1,043
Current Price: ₹800
Verdict: Slightly undervalued even by PSU standards.
➡️ Private banks trade at 15–20x P/E. SBI at 9.2x is a joke… unless you believe the PSU curse is eternal.
🤺 6. Peer Wars: SBI vs The PSU Lads
| Bank | CMP | P/E | ROE | Net Profit (Qtr) |
|---|---|---|---|---|
| SBI | ₹800 | 9.2 | 17% | ₹20,379 Cr |
| BoB | ₹239 | 6.0 | ~15% | ₹5,447 Cr |
| PNB | ₹106 | 6.6 | ~12% | ₹5,011 Cr |
| Canara | ₹111 | 5.7 | ~15% | ₹5,111 Cr |
| IOB | ₹38 | 22.0 | ~8% | ₹1,051 Cr |
- SBI is the only PSU bank with ₹20k+ Cr quarterly profit.
- Its 17% RoE matches HDFC Bank. No joke.
- It’s not “cheap” because it’s weak – it’s cheap because PSU.
🚀 7. The Next Trigger: What Can Unlock Value?
- Govt stake sale? Not happening soon.
- SBI Cards, SBI Life, YONO IPOs? Could unlock value.
- NPA clean-up? Already done – Net NPA at 0.52%.
- Dividend growth? Maybe, if payout is increased beyond 18%.
But the biggest unlock?
👉 Market believing PSU banks can grow like private banks.
Until then, SBI remains the Mukesh Khanna of banks – powerful, respected… but stuck in a Doordarshan image.
💡 Final Thoughts
If SBI were a Bollywood movie, it’d be Sholay – iconic, occasionally boring, but box-office gold.
At ₹800, you’re paying for a bank with:
✅ 36% profit CAGR
✅ 17% RoE
✅ ₹7 lakh crore market cap
✅ Near-zero NPAs
✅ 2% dividend yield
…all while private banks like Axis and ICICI trade at 1.5–2x the valuation.
🧠 EduInvesting Tags:
SBI stock analysis, PSU bank stock, undervalued large cap, high dividend bank, SBI fair value, SBI vs private banks, SBI earnings 2025, State Bank of India stock, Indian bank stock analysis
✍️ Written by Prashant | 📅 26 June 2025
