Financials · investment research
State Bank of India
SBIN
Verdict
NO ACTION
low confidence · 3-5 years
Composite score
56/100
Weighted across all eight pillars
Business quality
65/100
Moat, returns, balance sheet, cash, management
Valuation score
45/100
At 35.2x against a sector median of 46.9x, the price embeds roughly 21% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
No action. Nothing here is compelling enough to deploy capital today.
WHY
- • Balance sheet scores 96/100 (deteriorating) — Leverage is serviceable from current cash generation.
- • Cash conversion scores 75/100 (stable) — Reported profit is backed by operating cash.
- • Industry & macro scores 26/100 (deteriorating) — Financials (India) demand is deteriorating.
- • Business & moat scores 61/100 (improving) — Scale and integrated operations keep unit costs below most listed peers.
WHERE
Financials · Large cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 10% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹2,045 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Governance — Related-party transactions at 5.5% of revenue
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check Repo rate — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
State Bank of India is a competitively exposed financials business compounding revenue at 4.3% and profit at 9.9%, earning 13.5% on capital. Quality scores 65/100 and valuation 45/100 at 35.2x. The decision is therefore no action with low confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
State Bank of India operates in the Indian financials sector with a large-cap footprint and a listed market value of about ₹725k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Net interest margin and credit growth
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Depreciation from recent capex
- • Distribution and marketing spend
Moat · 35/100
Cost leadership
Scale and integrated operations keep unit costs below most listed peers.
Segment mix
Growth 8.1% · margin 29.8% — Growing broadly in line with the overall business.
Growth -0.7% · margin 13.8% — Flat to declining; drags the consolidated growth rate.
Growth 20.2% · margin 31.6% — Fastest growing part of the mix — watch whether margins hold as it scales.
Growth 30.2% · margin 28.9% — Fastest growing part of the mix — watch whether margins hold as it scales.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
61/100Trend: improving · weight 14%
- MoatCost leadership
Scale and integrated operations keep unit costs below most listed peers.
- Segment concentrationRetail lending is 36% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin32.0%
Margin moved from 15.0% to 32.0% year on year.
Profitability & returns
39/100Trend: deteriorating · weight 16%
- ROCE13.5%
ROCE was 17% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE16.6%
Return on equity after leverage — read alongside debt levels.
- Net margin22.4%
Share of every rupee of revenue that reaches reported profit.
Growth quality
41/100Trend: improving · weight 15%
- Revenue CAGR (4y)4.3%
Top-line compounding over the reported history.
- Profit CAGR (4y)9.9%
Profit is compounding faster than revenue — operating leverage is working.
- Growth sourceCapex-led (organic)
Capex is 10.0% of revenue this year.
Balance sheet
96/100Trend: deteriorating · weight 12%
- Debt / EBITDA0.18x
Leverage is serviceable from current cash generation.
- Debt / equity0.04x
Capital structure relative to shareholder funds.
- Working capital99 days
Long cycle: each rupee of growth locks up more cash.
Cash conversion
75/100Trend: stable · weight 13%
- OCF / PAT91%
Reported profit is backed by operating cash.
- Free cash flow₹20,889 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
55/100Trend: deteriorating · weight 14%
- Guidance delivery70% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding29.1% (-1.27 y/y)
Promoters have been reducing ownership over the last year.
- PledgeNo pledge
No pledge disclosed in the sample data.
- Institutional flowFII -2.58 · DII -2.06
Direction of institutional ownership over the last year.
- Capital allocationMost operating cash is reinvested into the core …
Most operating cash is reinvested into the core business.
Industry & macro
26/100Trend: deteriorating · weight 8%
- Demand trenddeteriorating
Financials (India) demand is deteriorating.
- StructureConsolidated
Consolidated — a few large players hold most of the profit pool.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversRepo rate, Credit growth, Asset quality cycle
Variables that move the earnings base regardless of company execution.
Valuation
45/100Trend: stable · weight 8%
- P/E vs sector35.2x vs 46.9x
At 35.2x against a sector median of 46.9x, the price embeds roughly 21% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted3.56 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield2.88%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹1.70 L Cr | ₹56,162 Cr | ₹30,889 Cr | ₹25,638 Cr | ₹12,023 Cr | 14.3% |
| FY2023 | ₹1.78 L Cr | ₹55,159 Cr | ₹29,786 Cr | ₹25,318 Cr | ₹18,201 Cr | 15.4% |
| FY2024 | ₹1.86 L Cr | ₹61,273 Cr | ₹34,926 Cr | ₹30,386 Cr | ₹17,389 Cr | 12.3% |
| FY2025 | ₹1.93 L Cr | ₹29,013 Cr | ₹17,988 Cr | ₹16,009 Cr | ₹-1,399 Cr | 17% |
| FY2026 | ₹2.01 L Cr | ₹64,372 Cr | ₹45,060 Cr | ₹41,005 Cr | ₹20,889 Cr | 13.5% |
- ⚠ Working capital cycle is long; growth consumes cash.
Ownership & management
Who owns it, and have they delivered?
Promoter
29.1%
-1.27 y/y
Pledge
None
No disclosed pledge
FII
31.6%
-2.58 y/y
DII
27.8%
-2.06 y/y
Guidance delivered in 70% of the last eight quarters; average leadership tenure 13 years.
Most operating cash is reinvested into the core business.
- ⚠ Related-party transactions at 5.5% of revenue
Industry & macro context
Financials (India)
Demand trend
deteriorating
Cyclicality
medium
Competition
high
Regulatory pressure
medium
Consolidated — a few large players hold most of the profit pool.
Macro drivers: Repo rate · Credit growth · Asset quality cycle
Valuation
fair versus the sector
P/E
35.2x
Sector median P/E
46.9x
P/B
11.79x
Earnings yield
2.84%
FCF yield
2.88%
PE / growth
3.56
Estimated fair-value band ₹2,045 – ₹2,613 , built on FY2026 EPS of ₹50.5. Gap to the current price: +186.8%. Ranges are a modelling output, not a target price.
At 35.2x against a sector median of 46.9x, the price embeds roughly 21% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Governancehigh
Related-party transactions at 5.5% of revenue
Monitor: Annual report disclosures and auditor commentary.
- Accounting qualitymedium
Working capital cycle is long; growth consumes cash.
Monitor: Cash-flow statement versus P&L each quarter.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 13.5% | stays above 11% | falls for two consecutive years |
| Cash conversion | 91% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 4.3% CAGR | tracks the 21% priced in | slows for two quarters with no margin offset |
| Promoter holding | 29.1% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 58/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.
- • Accounting flags reduce the reliability of the reported profit base.