PSU banking stocks are back in focus after the Q4 FY26 earnings season, but the market reaction has been mixed across the sector. While all three major public sector lenders — State Bank of India, Punjab National Bank, and Bank of Baroda — reported profit growth, investors are now focusing more on asset quality, margin trends, and long-term business strength rather than just headline earnings numbers.
reported a 5.6% YoY rise in standalone net profit to ₹19,683.75 crore for Q4FY26, while net interest income grew 4.13% YoY to ₹44,380 crore. However, domestic net interest margin narrowed to 2.93%. Asset quality improved, with gross NPA ratio easing to 1.49% and net NPA ratio declining to 0.39%.
posted an 11.25% YoY increase in standalone profit at ₹5,615.68 crore. Its NII rose 8.7% YoY to ₹12,494 crore, though global NIM slipped to 2.89%. Gross NPA improved to 1.89%, while net NPA fell to 0.45%.
reported a 14.41% YoY rise in profit to ₹5,225.11 crore despite a 3.5% decline in NII. The lender also reported improvement in both gross and net NPAs during the quarter.
Which PSU lender should you buy?
With PSU back in the spotlight after Q4FY26 earnings, investors are now facing a key question — which public sector lender offers the best mix of growth, stability and valuation upside? While State Bank of India, Punjab National Bank and Bank of Baroda all reported healthy profit growth and improving asset quality, analysts believe the investment case for each bank is very different depending on risk appetite, margin outlook and technical setup.
According to Mayank Jain, Market Analyst at Share.Market, SBI continues to remain the strongest PSU banking franchise due to its scale, balance sheet strength and digital leadership. The lender reported a standalone Q4FY26 net profit of ₹19,684 crore, up 5.6% YoY, while annual profit crossed a record ₹80,032 crore.
Jain noted that SBI’s asset quality improved further, with gross NPA declining to 1.49% and net NPA falling to 0.39%, both at multi-decade lows. However, he added that the Street remained cautious due to pressure on margins, as SBI’s whole bank declined to 2.91% from 3.08% a year ago amid rising deposit costs. According to Jain, the stock also witnessed sharp post-results selling pressure, reflecting concerns around near-term earnings momentum.
“However, the stock continues to hold above its long-term 200-day SMA, suggesting that the broader uptrend remains intact. We need to watch for price strength until the stock is able to cross its short-term moving averages and sustain levels above them,” Jain said.
On Punjab National Bank, Jain said the lender delivered one of the strongest earnings growth numbers among PSU banks in Q4FY26. PNB reported a net profit of ₹5,225 crore, up 14.4% YoY, supported by improving asset quality and strong retail and MSME growth. Gross NPA improved sharply to 2.95%, while net NPA declined further to 0.29%.
However, Jain stated that technically, PNB currently remains the weakest among the three PSU banking counters. According to him, the stock continues to trade below major moving averages such as the 20, 50 and 200-day SMA, indicating that the broader trend remains under pressure despite improving fundamentals.
For Bank of Baroda, Jain said the bank delivered one of the most balanced performances among PSU lenders during the quarter. BoB reported Q4 net profit of ₹5,616 crore, up 11.2% YoY, while annual profit crossed ₹20,000 crore for the first time. He added that loan growth remained healthy across retail, MSME and agriculture segments, while gold loans surged nearly 98% YoY, indicating strong traction in secured retail lending.
“On the technical charts, Bank of Baroda is still trading below key short-term and long-term moving averages, indicating that bullish momentum has not fully returned yet. Technically, we have to wait for some price stability, and the price should move above the 200 SMA and sustain that level for an upward movement,” Jain noted.
Meanwhile, Seema Srivastava, Senior Research Analyst at SMC Global Securities, believes Bank of Baroda currently emerges as the top pick among PSU banks due to its execution strength and balanced financial performance. She highlighted that the lender delivered its highest-ever annual net profit while also beating Street estimates. According to Srivastava, BoB’s 11.2% YoY profit growth and robust 16.2% advance growth — driven largely by a massive 98% jump in gold loans — demonstrate strong high-yield expansion.
Srivastava further pointed out that while peers faced margin pressure, BoB managed to expand its domestic NIM to 3.08%, making it attractive from a long-term risk-reward perspective. She believes the stock offers one of the most balanced opportunities for steady capital appreciation.
On SBI, Srivastava described the lender as the defensive anchor within the PSU banking pack. She said that despite sequential pressure due to higher operating costs, SBI’s scale remained unmatched, reflected in its ₹19,684 crore quarterly profit and 16.87% growth in advances. Srivastava added that SBI’s return on equity of 18.57% was the highest among the three lenders, highlighting its profitability despite its large size.
According to Srivastava, SBI’s asset quality also remains exceptionally strong, with net NPA at 0.39% and capital adequacy ratio at 15.40%, making it a preferred long-term holding for investors seeking stability and dominance in India’s banking sector.
On PNB, Srivastava said the bank represents more of a turnaround opportunity. She noted that while the lender reported the strongest profit growth at 14.4% YoY and sharply improved asset quality, margin pressure remains a concern, with NIMs declining to 2.57% and NII remaining largely flat.
Srivastava added that although PNB’s provision coverage ratio of 97.14% and capital adequacy ratio of 17.74% remain impressive, the bank still lacks the operational efficiency of Bank of Baroda and the market leadership of SBI. According to her, investors may prefer Bank of Baroda for growth, SBI for stability, while PNB may suit only those expecting further valuation re-rating driven by continued recovery.
Technical outlook
Ganesh Dongare, Senior Manager – Technical Research at Anand Rathi, believes PSU banking stocks are showing mixed technical signals, with traders needing to remain selective despite improving fundamentals across the sector.
According to Dongare, State Bank of India is currently stuck in a broad consolidation range between ₹900 and ₹1,100, indicating indecisive price action. He noted that the ₹1,100 zone continues to act as a strong resistance area, while a sustained breakout above this level could trigger fresh bullish momentum. However, a fall below ₹900 may lead to renewed selling pressure.
On Bank of Baroda, Dongare said the stock is trading near a key resistance zone around ₹265 but has yet to show a convincing reversal pattern. He added that weak buying momentum and the absence of a clear breakout structure limit the stock’s near-term upside potential.
Meanwhile, Dongare remains relatively more positive on Punjab National Bank. He said PNB is forming a constructive bullish setup near ₹108, with medium-term upside targets seen in the ₹130– ₹140 range. According to him, the stock currently offers a favourable risk-reward profile for technically driven investors.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.