SBI plans $2.9 billion share sale as early as next week

Mumbai, July 10, 2025 —
India's largest lender, the State Bank of India (SBI), is preparing to launch a $2.9 billion share sale as early as next week, in what could be one of the country's biggest equity offerings in recent years. The capital infusion is expected to strengthen SBI’s balance sheet, support future credit growth, and maintain capital adequacy under Basel III norms.

Share Sale Structure and Timing

According to sources familiar with the development, the share sale will be conducted via a qualified institutional placement (QIP) route, targeting domestic and foreign institutional investors. SBI has already secured approval from its board and shareholders for raising equity capital up to ₹20,000 crore (approximately $2.9 billion) in FY2025.

The QIP may launch as early as next week, depending on market conditions. The bank is working with several investment banks including Kotak Mahindra Capital, BofA Securities, and JPMorgan, to manage the offering.

Market Context and Capital Needs

The move comes amid a surge in credit demand, especially in corporate and retail segments, and ahead of expected rate cuts by the Reserve Bank of India later this year. With a robust credit pipeline and a government push for infrastructure and manufacturing, SBI is keen to capitalize on growth opportunities.

“The capital raise will bolster SBI’s Tier-I capital, allowing it to maintain healthy buffers while expanding its loan book,” said Rohit Agarwal, banking analyst at Motilal Oswal. “It also positions the bank competitively against private sector peers who have been aggressively expanding in retail and SME lending.”

As of March 2025, SBI’s Capital Adequacy Ratio (CAR) stood at 14.68%, with Tier-I capital at 11.3%. The infusion will likely add 100-120 basis points to Tier-I capital, analysts estimate.

Government Stake and Strategic Implications

The Indian government currently holds a 57.49% stake in SBI. While the upcoming QIP is expected to dilute this holding modestly, it will still retain majority control. Analysts say the government is unlikely to participate in the offering, allowing greater participation from institutional investors.

“SBI’s share sale is strategically timed,” said Shweta Mehra, head of institutional research at Axis Securities. “It allows the bank to diversify its shareholder base, attract global capital, and increase its float ahead of potential inclusion in broader international indices.”

The government’s emphasis on making public sector banks more competitive and financially autonomous also adds weight to this capital-raising exercise.

Investor Appetite and Valuation

With SBI shares gaining over 28% in the past 12 months, investor sentiment remains bullish. The bank is currently trading at around 1.4x FY26E book value, which is still considered attractive compared to private sector peers like HDFC Bank and ICICI Bank.

“SBI remains a structural long-term story,” said Amol Jadhav, fund manager at Nippon India Mutual Fund. “Its improved asset quality, digital transformation, and strong liability franchise make it a compelling bet.”

Market watchers expect robust demand from sovereign wealth funds, global pension funds, and domestic mutual funds. The QIP pricing is expected to be at a small discount to the current market price, as per SEBI guidelines.

SBI's Growth Strategy

The share sale aligns with SBI’s broader strategy to remain a dominant force in India’s banking sector. The bank is expanding its digital banking services under the YONO platform, investing in fintech collaborations, and enhancing its presence in semi-urban and rural regions.

In FY24-25, SBI posted a net profit of ₹64,240 crore, up 18% YoY, with gross non-performing assets falling to 2.34% — the lowest in over a decade. Credit growth was led by retail loans (up 16%) and corporate loans (up 12%).

“With a strong liability base and improving return ratios, SBI is well-positioned for the next credit cycle,” said Nirav Shah, banking sector head at Edelweiss.

Outlook for Investors

Analysts maintain a positive long-term outlook on SBI, with several brokerages issuing ‘Buy’ or ‘Overweight’ ratings. The upcoming QIP, while causing temporary dilution, is seen as a proactive step toward future readiness.

The broader market environment is also conducive. With easing inflation, stable interest rates, and robust FII flows into Indian equities, large-cap public sector banks are back in focus.

“Investors should view this not as a dilution event but as a growth-enabler,” said Mehra of Axis Securities. “SBI is preparing for the next phase of India’s economic expansion — and it wants to lead from the front.”