Buy SBI Cards; target of Rs 900: Motilal Oswal

Motilal Oswal's research report on SBI Cards

SBI Cards (SBICARD) posted PAT of INR6.03b, up 15% but a 7% miss vs. our expectations. NII grew in line at 16% YoY; however, elevated provisions dragged earnings down. Margin contracted 12bp QoQ to 11.3% amid decreasing yield as the mix of EMI and revolver stood broadly stable. Growth in spending was healthy, with retail spending up 21% YoY while corporate spending rose 55% YoY. GNPA ratios inched up marginally by 2bp to 2.43%, while NNPA ratio was stable at 0.89%. RoA/RoE stood at 4.9%/22.3% during the quarter.

Outlook

We cut our FY24E/25E earnings by 8%/10% to factor in lower margins and elevated credit costs. We also introduce FY26E and estimate SBICARD to deliver 35% earnings CAGR over FY24–26, following a flattish earnings growth in FY24. Reiterate BUY with a revised TP of INR900 (premised on 22x Sep’25E EPS).

For all recommendations report, click here