Geojit's research report on SBI Cards and Payment Services
SBI Cards & Payment Services (SBI Cards) is the leading issuer of credit cards in India. Company offers wide range of value-added payment products and services. SBI cards operates in more than 130 cities in India. Net interest income rose 20.0% YoY in Q2FY21, aided by NIM expansion (+185bps YoY) with higher interest income yield (+56bps YoY) and lower cost of funds (-96bps). Non-interest income was up 1.9% YoY. Pre-provision profit grew 37.1% YoY, further helped by lower opex (- 9.5% YoY). However, PAT fell 45.9%, impacted by higher provisioning. Overall cost to income ratio improved to 49.3% (-10.3bps YoY). Company added 688k new accounts during the quarter. Cards in force rose 3.8% QoQ to 11,009k, and spends per card increased to Rs. 110k from Rs. 72k in Q1FY21.
Outlook
Growth momentum should pick-up in retail credit activity and daily spends in upcoming quarters. Given current upside potential, we reiterate BUY on the stock with a TP of Rs. 913 based on 10.5x FY22E.
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