A leading credit card company is garnering attention from major financial institutions, earning favourable ratings and heightened price targets due to strengthening fundamentals. With improving asset quality, stabilising credit costs, and robust growth in metropolitan markets, the company demonstrates promising momentum, setting the stage for potential benefits from future monetary policy adjustments.
Share Price Movement
The share price of SBI Cards & Payment Services Limited hit an intraday high of 5.16 percent to Rs. 760.90 per share on Monday, an increase from its previous close of Rs. 723.55 per share. The market capitalisation now stands at approximately Rs. 69,610 crore as of January 06, 2025.
Reason for Price Surge?
Nomura and Nuvama have upgraded SBI Card to “Buy” raising target prices to Rs. 825 and Rs. 850, an upside of 17.53%.
Rationale: citing improvements in asset quality and credit cost stabilisation. Metro region credit card debt and sourcing from top metro cities have increased since FY23. November 2024 saw the highest net card additions since December 2023. Credit costs are expected to decline further in FY25 and beyond, with SBI Card likely benefiting from potential policy rate cuts in FY26.
Financial Highlights
New accounts opened stood at 9.04 lakh, marking a 21% YoY decline. Receivables grew to Rs. 55,601 crore, reflecting a 23% YoY increase and a slight QoQ rise. The cost-to-income ratio was 53.4%, down 375 bps YoY but up 449 bps QoQ. Meanwhile, the net NPA reached 1.19%, increasing by 31 bps YoY and 8 bps QoQ.
Retail spends reached Rs. 76,880 crore, growing 24% YoY and 6% QoQ. The liquidity coverage ratio (LCR) stood at 108%, exceeding the statutory requirement of 85%. The capital adequacy ratio (CAR) was 22.1%, down 119 bps YoY but up 151 bps QoQ.
Market Outlook
India’s digital finance sector is flourishing due to robust government support, increasing smartphone usage, and digitalisation in key sectors like e-commerce and mobility. Innovations such as UPI and account aggregator networks have enhanced financial inclusion.
Credit card usage is growing rapidly, with a 19.3% rise in circulation and 28% growth in spending in FY 2023-24. Expanding POS and Bharat QR terminals further boost adoption. Initiatives like UPI integration with RuPay credit cards drive seamless transactions, solidifying the industry’s growth trajectory.
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Shareholding Pattern
As of the September 2024 shareholding pattern, SBI Cards & Payment Services Limited is primarily held by the promoters at 68.61 percent, foreign institutional investors hold 9.18 percent, and the public with 5.46 percent.
About Company
SBI Cards & Payment Services Limited, a key player in India’s credit card market since 1998, became a public company in 2019 and is headquartered in Gurgaon, Haryana. It operates as a subsidiary of the State Bank of India and solidified its market position by acquiring GE Capital’s stake in 2017.
Offering a range of branded and co-branded credit cards, SBI Cards has over 20 million cards in circulation and leverages advanced technologies to enhance the customer experience. The company aims to expand its reach through its parent company’s branch network, focusing on innovation and financial growth.
Written By Fazal Ul Vahab C H
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