Neutral SBI Cards; target of Rs 875: Motilal Oswal

Neutral

Motilal Oswal's research report on SBI Cards

SBI Cards (SBICARD) reported a 3QFY26 PAT of INR5.6b (up 45% YoY/ 25% QoQ, in line). NIMs contracted 20bp QoQ to 11%, as most of the benefit from the lower cost of funds has already been realized, while yields carry a mild near-term downside bias, which could keep margins under check. Opex grew 23% YoY/5% QoQ (3% higher than MOFSLe), amid the labor code impact of INR120m.

Outlook

We reduce our earnings estimates by 4%/6.5% for FY26/FY27, considering a contraction in margins and a decline in receivables, while credit costs are likely to witness a modest decline. We expect SBICARD to post an RoA/RoE of 3.85%/17.9% by FY27E. Reiterate Neutral with a revised TP of INR875 (24x Sep’27E EPS).

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