Buy SBI Cards and Payment Services; target of Rs 1100: Motilal Oswal

Motilal Oswal's research report on SBI Cards and Payment Services

SBICARD reported a robust quarter on key business metrics and its net earnings delivered a strong beat aided by lower provisions. PAT thus grew 106% YoY to INR6.3b (MOSLe: INR5.3b). Margin was stable QoQ at 13.2% in 1QFY23. Revolver mix increased to 26% from 25% in 4QFY22. Trends in both retail and corporate spends were strong at 68% YoY and 130% YoY, respectively. Overall spends thus rose 79% YoY. GNPA/NNPA ratio stood stable QoQ at 2.24%/0.79% with PCR at ~65%. RBIRE book declined to INR1.5b. 1QFY23 RoA/RoE stood robust at 7.0%/30.8%.

Outlook

We estimate SBICARD to deliver 52% earnings CAGR over FY22–24, leading to an RoA/RoE of 7.4%/31.4%. Maintain BUY with an unchanged TP of INR1,100 (premised on 28x FY24E EPS).

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