According to brokerage Axis Securities, SBI Cards started FY13 with strong growth in spends, customer acquisition and card-in-force during the quarter and expectations of continuation of momentum are major positives.
Additionally, the bottom out of the revolver mix and its upward trajectory in the receivables mix will help SBI Cards maintain its NIM as the COF rises. With stable asset quality resting on the credit cost front, the trend is expected to remain benign, it said in its note.
“Thus, backed by healthy growth, stable NIM, strong fee income growth and muted credit cost, we expect SBI Cards to deliver a RoA/RoE of 6.0/27.5% by FY25E. However, maintaining and improving market share will be challenging amidst intense competition from banks (especially private banks) and SBIC’s proactive approach in this regard will be carefully observed. we keep our purchase Recommendation on a stock with a revised target price of 1,125/share,” Axis Securities added.
SBI Cards and Payment Services Ltd reports two-fold increase in net profit 627 crore in the first quarter ended June 30, due to a drop in crime. The card issuing company promoted by SBI had reported a net profit of 305 crore in the year-ago quarter. Its total income increased during the quarter to 3,263 crore against 2,451 crore in the same quarter last year.
“The performance of SBI Cards had several positives with increase in the share of revolver and interest-bearing receipts. The company has been gradually increasing the share of revolver in Tier-3 and beyond locations and sourcing share of SE customers and Cat B&C salaried customers. – Is guiding towards a gradual recovery.SBI Cards has started regaining its recently lost market share from June and is confident of gaining more ground in the coming months, brokerage Yes Securities said .
With broadly expected strong momentum to continue in the coming quarters, the brokerage has raised its FY23/24 earnings estimates by 7%/2%. It has reiterated its buy rating SBI Cards Share With a price target of 12 months 1,260, implying a potential increase of around 34% from current levels.
The views and recommendations given above are those of individual analysts or broking companies, not Mint
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