Neutral SBI Cards; target of Rs 975: Motilal Oswal

Motilal Oswal's research report on SBI Cards

SBI Cards (SBICARD) reported a 5% miss on PAT, which stood at INR5.3b in 4QFY25. The share of the revolver mix was flat at 24% and management expects the revolver mix to have a downward bias toward 23%. NIMs improved to 11.2%. Spends grew 2.6% QoQ (up 11% YoY), led by 15% YoY growth in retail spends, while corporate spends declined 17% YoY (up 63% QoQ). GNPA ratio improved to 3.08% (down 16bp QoQ), while NNPA ratio increased by 28bp QoQ to 1.46% as SBICARD made changes in ECL-3 classification, resulting in a decline in PCR to 53.5% (down 1,089bp QoQ).

Outlook

We raise our FY26E/FY27E EPS by 7.4%/9.9%, factoring in improvement in credit cost, rate cuts and improvement in margins. Reiterate Neutral with a revised TP of INR975 (22x FY27E EPS).