State Bank of India (SBI) shares were down on Friday after global brokerage firm Goldman Sachs downgraded the stock.

What The Brokerage Said: Goldman Sachs downgraded the stock to "sell" and slashed its target price to ₹742.  The brokerage said there are multiple headwinds for the stock as return on assets (RoA) peak and valuation derating is likely, it added.

The research firm believes the risk-reward profile is turning unfavourable due to increasing headwinds to sustain the RoA. Goldman Sachs expects the RoA to moderate from peak levels of 1% in FY24 to sub-1 % in FY26. 

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The brokerage firm also expects lower loan growth going forward due to the increasing gap with the deposit growth. Credit costs are also expected to rise due to increasing slippages in micro, small and medium enterprises, agriculture and unsecured portfolios.

Goldman Sachs cut the bank’s FY25-27 earnings per share estimate by 3%-9% and target multiple to 1 time from 1.2 times previously. 

Price Action: Shares of SBI were down 1.48% to ₹806.60 on Friday. 

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