Mumbai: UBS has upgraded State Bank of India to buy from neutral and raised target price to Rs 360 from Rs 330.

With a distribution reach over 3 times that of the second largest bank, SBI remains in a sweet spot in terms of deposit mobilisation-one of the critical factors to achieve above-industry loan growth rates, said UBS.

With a strong retail liability franchise coupled with slower NPL formation and the overhang from the merger with associate banks largely reduced, UBS expects marked improvement in profitability from FY20 onwards to lead to a re-rating.

Shares of SBI ended up 1.2% at Rs 270.75 on Friday.

"Trading at 0.75 times FY20E P/BV (adjusted for subsidiaries), below its historical average, we think the stock is inexpensive," said UBS in a note on Friday.