Capital Confidence: SBI Shares Rise 2% On Bond Issuance Plan And Strong Market Sentiment

Shares of State Bank of India (SBI), the country’s largest lender by assets, rose 2 percent during intraday trade on September 23, 2025, buoyed by investor optimism following the bank’s announcement of a major capital-raising initiative. The stock touched a high of Rs 833.90, edging closer to its 52-week peak of Rs 898.80, as market participants responded positively to the bank’s plan to issue up to Rs 20,000 crore in bonds to strengthen its capital base.

 

The rally comes amid broader gains in the banking sector, with PSU banks leading the charge on expectations of stable credit growth, improving asset quality, and supportive macroeconomic indicators.

 

Key Highlights From The Market Movement

 

- SBI shares gained 2 percent, reaching Rs 833.90 during intraday trade  

- The bank’s Central Board approved a Rs 20,000 crore bond issuance plan  

- Bonds will be issued under Basel III norms, including Tier 1 and Tier 2 instruments  

- Equity capital raise of Rs 25,000 crore also planned for FY26  

- Stock remains 7 percent below its 52-week high, with strong upward momentum  

 

Bond Issuance Strategy And Capital Objectives

 

SBI’s decision to raise Rs 20,000 crore through Additional Tier 1 and Tier 2 bonds marks its first major debt issuance since 2017. The funds will be raised in Indian rupees and are intended to bolster the bank’s regulatory capital ratios rather than fund expansion activities.

 

The capital infusion will help SBI:

 

- Maintain a healthy Common Equity Tier 1 (CET1) ratio  

- Absorb potential credit losses amid evolving macro conditions  

- Support lending growth across retail, corporate, and infrastructure segments  

- Comply with RBI’s capital adequacy norms under Basel III framework  

 

The bank has also outlined a separate plan to raise Rs 25,000 crore in equity capital during FY26 through Qualified Institutional Placement, Follow-On Public Offer, or other permissible methods.

 

Stock Performance And Investor Sentiment

 

SBI’s stock has been on an upward trajectory in recent months, supported by strong quarterly earnings, robust loan growth, and improving asset quality. The recent announcement has added fresh momentum, with analysts viewing the bond issuance as a proactive step to fortify the bank’s balance sheet.

 

Key trading metrics include:

 

- Last traded price: Rs 855.25  

- Market capitalization: Rs 7.89 lakh crore  

- Price-to-earnings ratio: 9.94  

- Earnings per share: Rs 86.06  

- Monthly return: 4.78 percent  

 

The bank’s six-month beta of 1.68 suggests potential for higher returns amid market volatility, making it an attractive pick for institutional investors seeking exposure to India’s banking recovery.

 

Sectoral Context And Competitive Position

 

SBI’s rally coincides with broader gains in the Nifty PSU Bank index, which rose 1.2 percent on the same day. Public sector banks are benefiting from:

 

- Stable interest rate environment  

- Strong deposit growth and improving CASA ratios  

- Declining gross non-performing asset levels  

- Government support for infrastructure lending and credit expansion  

 

Among peers, SBI continues to lead in terms of asset base, branch network, and digital adoption. Its ability to raise capital efficiently and maintain regulatory buffers positions it favorably in a competitive landscape.

 

Outlook For Capital Markets

 

The bond issuance plan is expected to attract strong demand from domestic mutual funds, insurance companies, and pension funds. With RBI maintaining a neutral monetary stance and inflation trending lower, the environment remains conducive for long-duration debt instruments.

 

Equity investors will be watching for:

 

- Execution timeline of the bond and equity capital raises  

- Q2 FY26 earnings performance and credit growth updates  

- Commentary on asset quality and provisioning trends  

- Strategic initiatives in digital banking and rural outreach  

 

Momentum Monitor

 

SBI’s 2 percent gain reflects renewed confidence in its capital strategy and long-term fundamentals. As the bank prepares to execute its fundraising roadmap, market participants will be tracking its ability to balance growth with prudence and deliver consistent shareholder value.

 

Sources: NewsBytes, Economic Times, NSE India Market Dashboard.