Here are 10 key reasons to invest in SBI Card IPO

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26 Aug, 2025 12:21

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Analysis

1> SBI Cards and Payment Services is one of the top four leading pure-play credit card issuers. Of the total 74 players offering credit cards in India, the top 4 dominates business grasping a total of 72 percent (approx.) market share (FY19).

2> In terms of cards service, it is the second largest (after HDFC Bank) with 10 milion cards in force for nine months of FY19. It has captured nearly 18.1 percent and 17.9 percent market share in credit card base and credit card spends on the back of increasing digital transactions & payments.

3> Over the years, SBI Card has been constantly gaining the market share, being the highest in terms of incremental cards with 45.0 percent market share in July 2019 & 24 percent during 3 months (May-July2019).

4> Having 18 co-branded partnerships in its bucket, which again is the highest in the industry compared to other players, followed by ICICI Bank at 12 and RBL Bank at 8. The credit card spends from these co-branded credit cards increased to 24.7 percent from 19.3 percent of total credit card spends in 9M FY 19 as compared to FY 2019 respectively.

Also read | SBI Cards IPO: 10 things to know about the keenly-eyed issue

5> It has partnership with the leading brands across industries including Air India, Apollo Hospitals, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money and Yatra.

6> Supported by strong parentage (SBI) provides access to its extensive branch network (> 21,000 branches) across India, a vast customer base (comprising 445.5 million) and also opens up room to become a significant source of new customers in future.

7> The company has launched six new products during 9M FY 2019, as compared to four in the entire FY 2019. The number stood at 6-7 during FY 2018 and 2017, respectively.

8> Having a diversified portfolio of credit card offerings and diversified revenue model the total income increased at a CAGR of 44.9 percent (FY17-FY19).

9> It has been maintaining ROE of over 25 percent since FY17. For FY19 it stood at 30 percent, which is remarkable.

10> ROAA increased from 4.0 percent in FY 2017 to 4.8 percent in FY2019.

Valuation

The credit card business has good prospects in the future as younger people prefer to use them for consumption needs. Also, the company is well positioned to take advantage of the rising trend of digital payments in future.

On the upper end of the price band of Rs 750-755 per share, with estimated EPS at Rs 16.6 for FY 20, the stock is currently available at a P/E ratio of 45.48x.

Given, top 4 players including SBI dominating more than 70 percent market share (FY19), SBI’s strong parentage, niche business and extreme growth outlook, SBI Cards commands high P/E and will get an advantage for the same. Thus, it could give high premium valuations. Therefore, we recommend subscribing to the IPO for listing gains as well as for long term perspective.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.