Brokerage Firm UBS has upgraded these two largest PSU Bank stocks with a target price of up to 23 percent from current levels. One of the stocks has been upgraded to Buy, and the other stock has been upgraded to Neutral rating.
1. STATE BANK OF INDIA
UBS has upgraded SBI to neutral and has given a price target of Rs. 840, which translates to an Upside of 8.50 percent from current levels of around Rs. 776. Out of the 50 analysts that have a converge on SBI, 40 have a buy rating, followed by 8 hold ratings and 2 sell ratings.
The rationale given by them is that the Bank is sustaining its Net Interest Margins (NIMs), which could act as a key catalyst for re-rating going forward. They also raised their Earning per Share (EPS) estimates by 3 percent for FY26, followed by an increase of 5 percent in FY27. Recent income tax rebates in the budget and 8th pay commission recommendations could benefit the loan and deposit of the bank.
The company reported a 10.45 percent YoY increase in revenue from Rs. 112,868 Crore in Q3FY24 to Rs. 124,654 Crore in Q3FY25. On a QoQ basis, the company reported an increase of 2.98 percent in revenue from Rs. 121,045 Crore in the previous quarter.
Their Net profit saw an increase of 67.99 percent YoY from Rs. 11,598 Crore to Rs. 19,484 Crore for the same period. On a QoQ basis, the company reported a decrease of 5.25 percent in Net profit from Rs. 20,565 Crore in the previous quarter.
The State Bank of India (SBI) is the largest public sector bank in India, founded in 1955 and headquartered in Mumbai, Maharashtra. With a legacy that traces back to the establishment of the Bank of Calcutta in 1806, the bank provides a comprehensive range of financial services, including retail banking, corporate banking, treasury operations, insurance, investment banking, and digital banking.
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BANK OF BARODA
UBS has upgraded Bank of Baroda to buy and has given a price target of Rs. 290, which translates to an Upside of 24 percent from current levels of around Rs. 233. Out of the 36 analysts that have a coverage on Bank of Baroda, 29 have a buy rating, followed by 5 hold ratings and 2 sell ratings.
The rationale given by them is that Bank of Baroda’s Net interest margin (NIM) of the company will witness less pressure when compared to private banks. The brokerage also mentioned that the credit costs will be under control and that the stock is trading at an attractive valuation when compared to private banks.
The loan growth for the bank over the FY25 to FY27 period is expected by the brokerage to be around 12 percent, the estimated Return on Assets (RoA) could be close to 0.9 percent, and the Return on Equity (RoE) to be around 13 percent over FY26.
The company reported an 8.41 percent YoY increase in revenue from Rs. 30,042 Crore in Q3FY24 to Rs. 32,570 Crore in Q3FY25. On a QoQ basis, the company reported an increase of 2.14 percent in revenue from Rs. 31,887 Crore in the previous quarter.
Their Net profit saw an increase of 9.03 percent YoY from Rs. 4,815 Crore to Rs. 5,250 Crore for the same period. On a QoQ basis, the company reported a decrease of 2.86 percent in Net profit from Rs. 5,405 Crore in the previous quarter.
Bank of Baroda (BoB) is one of India’s leading public sector banks, founded in 1908 and headquartered in Vadodara, Gujarat. It has a significant international presence in more than 15 countries, including the UK, UAE, and the US. BoB offers a full spectrum of banking and financial services, such as retail and corporate banking, wealth management, treasury services, insurance, and digital banking solutions.
Written By Abhishek Das
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