SBI Cards and Payment Services (SBICARD) reported a steady quarter as its PPoP delivered a healthy beat of 10% YoY supported by higher other income even as NII was in line. PAT grew 3% YoY to INR6.0b (8% beat) in 4QFY23. Margin contracted 10bp QoQ to 11.5% in 4QFY23 due to lower revolver mix (24%) and a higher cost of funds. Growth in spends was healthy at 4% QoQ, with retail spends up 33% YoY while corporate spends rose 32% YoY. GNPA/NNPA ratios expanded 13bp/7bp QoQ to 2.35%/0.87%. PCR was stable at ~64%. RoA/RoE came in at 5.0%/24.6% during the quarter. We cut our estimates slightly to factor in higher provisions.
OutlookWe estimate SBICARD to deliver 28% earnings CAGR over FY23–25, leading to an RoA/ RoE of 5.9%/26.4%. Reiterate BUY with a revised TP of INR930 (premised on 27x Sep’24E EPS).
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