SBI delivers 360-degree performance
State Bank of India has impressed markets with comprehensive improvements across all key metrics. The banking giant has revised its loan growth guidance upward from the 12-14% range to 13-15%, signaling strong momentum in credit expansion.
Talking to ET Now, Joshi explained: “The worst in terms of CASA deterioration is largely behind us.” He further noted that net interest margins (NIMs) have improved to 2.95% and are expected to reach approximately 3%. The bank’s asset quality remains pristine, with net non-performing assets (NPAs) declining further.
A particularly impressive development is the growth of SBI’s digital banking platform, Yono, which now boasts a customer database of nearly 10 crore (100 million) users. Despite the strong performance, the stock continues to trade at approximately 1.7 times book value, remaining cheaper than most private sector banks.
SBI key performance indicators
| Metric | Performance |
| Loan Growth Guidance | 13-15% (revised up) |
| Current NIM | 2.95% (expected ~3%) |
| Yono Customer Base | ~10 crore users |
| Price-to-Book Ratio | ~1.7x |
Jewellery sector shines: Kalyan Jewellers beats expectations
The jewellery sector has emerged as a strong consumption play, with Kalyan Jewellers posting a 7% gain following better-than-expected quarterly results. The company surprised markets despite initial concerns about reduced grammage sales due to higher gold prices and slow uptake in studded jewellery.
Kalyan’s EBITDA margins improved to approximately 7-7.5%, approaching levels seen in previous quarters. The strong performance indicates that the wedding season is in full swing, with the fourth quarter expected to deliver maximum impact as marriage dates pick up significantly after the Sankranti period.
“All the regulatory changes that have now happened mean organised players are taking market share at the expense of unorganised ones,” Joshi noted. While acknowledging Kalyan’s strong numbers, he suggested that Titan remains slightly better positioned in the sector.
Real estate: Recovery underway after correction
The real estate sector has experienced significant underperformance, with stocks correcting due to three primary concerns: rising inventory levels, slower pre-sales velocity, and leverage concerns. However, select companies are demonstrating resilience.
Godrej Properties has reaffirmed its full-year guidance, emerging as one of the strongest performers in the space. DLF maintains a strong position across both residential and annuity businesses, while Phoenix Mills has demonstrated exceptional performance in the mall segment.
With expectations of an additional 25 basis point interest rate cut in coming months, borrowing costs should decrease for investors and retail participants, providing support to the sector. Phoenix Mills, despite its strong run, has entered a late-stage base and could benefit from upcoming mall additions and rental escalations.
Small finance banks: Value opportunity in MFI-exposed segment
Small finance banks and lenders exposed to the microfinance sector could represent a value opportunity, trading at 1-1.5 times book value after experiencing significant challenges. Joshi expects conditions to improve in fiscal year 2027.
Recent budget initiatives targeting the SME and MSME segments should act as enablers for this subsector. While the space has faced asset quality pressures and taxation challenges, regulatory oversight is increasing and financial assistance is expanding.
”The hope here is that as we enter the first half of the next financial year, things should get better,” Joshi explained. He specifically highlighted Equitas as a holding in his swing portfolios, noting that lenders with appropriate loan-to-value ratios and balanced risk exposure to MSME segments are well-positioned for recovery.
Diversified approach to consumption plays
According to Joshi, consumption in India requires a broad-based, selective approach across multiple categories:
- Consumer staples and FMCG: Focus on companies demonstrating leadership traits
- Alcoholic beverages: Selective opportunities where leadership characteristics exist
- Apparel: Domestic manufacturers with strong presence in tier II and tier III cities, where consumption growth is concentrated
- Consumer durables: A structural story expected to play out over the next several years, though requiring stock-specific selectivity
Investment outlook
Market conditions present differentiated opportunities across sectors. While SBI demonstrates continued strength in the banking space with stellar fundamentals and attractive valuations, opportunities are emerging in previously beaten-down segments like small finance banks and real estate.
The consumption theme remains intact but requires careful stock selection, with growth increasingly coming from tier II and tier III cities. Organised players in jewellery continue gaining market share from unorganised competitors, benefiting from regulatory changes and the ongoing wedding season.
As interest rates potentially decline further and government support for SME and MSME sectors strengthens, selective opportunities in previously challenged segments may offer compelling risk-reward profiles for patient investors.
Disclaimer: This report is based on expert market commentary and is intended for informational purposes only. It does not constitute financial advice. Investors should conduct their own research and consult with financial advisors before making investment decisions.