SBI is currently trading at a price-to-book (P/B) multiple of 2.41, compared with 2.69 for HDFC Bank, 2.92 for ICICI Bank, 2.20 for Axis Bank and 2.49 for Kotak Mahindra Bank. A year ago, SBI’s P/B stood at 1.35, indicating a sharp re-rating. Over the same period, HDFC Bank’s multiple has remained largely unchanged, ICICI Bank’s has eased from 3.18, Kotak Mahindra Bank’s has declined from 2.66, while Axis Bank’s has expanded from 1.82.
The P/B multiple is one of the most important valuation metrics for banks because they deal in financial assets & liabilities marked closer to their book value, reflecting the bank’s intrinsic worth.
Kranthi Bathini, Director–Equity Strategy at WealthMills Securities, said SBI’s rally does not come as a surprise, describing it as one of the most dynamic performers in the banking space. “The bank has executed well and successfully unlocked value in its subsidiaries. Its Q3 results were strong, and it appears poised for the next leg of the rally,” he said.
Bathini considers SBI fairly valued and maintains it as his preferred pick within the PSU banking space. He expects the stock to continue benefiting from the growing investor tilt towards government-owned banks over their private sector peers.
Bonanza’s Research Analyst Abhinav Tiwari sees a favourable near-term risk-reward for SBI stock, arguing it stands out for its valuation comfort, earnings visibility, and re-rating potential. “State Bank of India is trading at 2.4X P/B multiple which is supported by a clear improvement in fundamentals. ROE of 16-17% and ROA above 1% are structurally higher than SBI’s past averages. Loan growth guidance of 13-15% on a very large Rs 38 lakh crore book gives strong earnings visibility,” he said.
SBI share price performance
SBI recently overtook IT bellwether Tata Consultancy Services (TCS) to become India’s fourth-largest company by market capitalisation, with its valuation crossing Rs 11 lakh crore. The only companies ahead of SBI are Reliance Industries, HDFC Bank and Bharti Airtel.
Also read: Who imagined this? SBI overtakes TCS, Infosys in m-cap amid PSU banks’ turnaround: Gurmeet Chadha
The stock is currently trading above its 50-day and 200-day simple moving averages of Rs 1,023 and Rs 890, respectively, according to Trendlyne data. However, the rally has not been without risks, as the stock has displayed elevated volatility. Its one-year beta stands at around 1.6, according to Trendlyne, indicating significantly higher sensitivity to broader market movements.
Within the Nifty Bank index, only AU Small Finance Bank (up 88%) and Canara Bank (up 70%) have delivered higher one-year returns than SBI. Indian Bank (75%), part of the Nifty PSU Bank index, has also outperformed SBI during this period.
Among large-cap peers, however, SBI leads by a wide margin. Axis Bank is the closest with 34% one-year returns, while HDFC Bank, ICICI Bank and Kotak Mahindra Bank have delivered comparatively modest gains of 9%, 12% and 9%, respectively.
SBI’s risk-reward favourable?
Dr. Ravi Singh, Chief Research Officer at Master Capital Services, believes SBI is no longer deeply undervalued and is now trading well above its long-term average valuations. According to him, the recent re-rating has largely factored in the improvement in asset quality and earnings. From here on, he expects returns to be driven more by stronger RoE delivery rather than further multiple expansion.
That said, SBI is trading at a meaningful discount to HDFC Bank and ICICI Bank despite delivering comparable return ratios, Singh said.
The risk-reward is currently more balanced in SBI on a relative basis because of the valuation cushion but valuations are fair and do not offer a big margin of safety, he warned.
Also read: Risk-on trade back? Smallcap stocks rally up to 28% in 2026, but market breadth stays weak
SBI vs private peers: Should you buy?
Bathini of WealthMills reiterated a ‘Buy’ view on SBI, estimating a 10-15% upside over the next 12 months.
Dr Singh of Master Capital remains positive for another 15-20% rally from the current levels. Between SBI and private banks, he puts his money on SBI for valuation comfort and steady earnings visibility, though he expects a gradual growth in share price, instead of a sharp move.
Tiwari of Bonanza deems ICICI Bank a better long term buy because of its low volatility compounding potential but backs SBI for near-term gains, citing valuation as the deal clincher. “[SBI’s] Asset quality has improved meaningfully, with GNPA at 1.57%, capital adequacy remains comfortable at over 14.04%, and NIMs are holding close to 3%. As SBI’s operating metrics move closer to private banks, the valuation gap is naturally narrowing,” he added.
SBI reported a 24% year-on-year (YoY) growth in its standalone net profit at Rs 21,028 crore in the third quarter while its net interest income (NII) increased 9% YoY to Rs 45,190 crore in the quarter under review.
In his view, HDFC Bank continues to grapple with post-merger integration challenges following the HDFC Ltd amalgamation. A high CD ratio is constraining loan growth and pressuring margins as the bank prioritises deposit mobilisation. Growth may trail peers over the next 12–18 months and its premium valuation also caps near-term upside until key metrics normalise, he opined.
While Axis Bank currently looks attractive from a valuation standpoint, it has emerging concerns, said the Bonanza analyst, highlighting elevated provisions which more than doubled to Rs 2,156 crore in Q3FY26 due to stress in unsecured retail credit cards and personal loans. Moreover, bank’s loan growth slowed to 9% YoY and NIM declined to 3.93%.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)