Accumulate SBI Cards and Payment Service; target of Rs 935: Prabhudas Lilladher

Prabhudas Lilladher's research report on SBI Cards and Payment Service

SBI Cards and Payment Services (SBICARD) reported a mixed quarter with higher other income and lower operating expenses driving PAT beat of Rs0.7bn. Strong growth of 41% YoY in spends and 30% YoY in receivables are some of the positives. Company revised their ECL model resulting in additional credit costs of 20bps, but management expects it to moderate gradually. It also looks to add 900k-1mn accounts on quarterly basis, going ahead. Further, average spends of newly acquired customers stands higher in Q4 than earlier existing customers, thereby aiding growth.

Outlook

We maintain ‘Accumulate’ rating and our TP at Rs935 (32x on PE Sep’24E results). Re-rating can happen when revolver mix edges higher and company shows moderation in credit costs, going forward.

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