Choice Equity Broking's IPO report on SBI Cards
SBI Cards and Payment Services Ltd. (SBI Card), another PSU stock is about to enter equity market with its IPO, which opens on 2nd Mar.and close on 5th Mar. 2020. The price band is Rs. 750 - 755 per share. •The issue comprises of 137.15 - 137.19mn shares (fresh issue: 6.62 - 6.67; OFS shares: 130.53mn shares) in offering. Total IPO size is Rs. 102,895.1 - 103,547.7mn. •The company will not receive any proceeds from OFS. Majority of thefresh issue net proceeds, will be utilize by the company to augmentthe capital base so as to meet the future capital requirement.
Valuation and Outlook
On valuation front, at higher price brand SBI Card is demanding an adjusted P/B multiple of 15.6x, as compared to globalpeer average of 2.7x. Based on FY22E adjusted P/B, it is demanding a valuation of 8.6x. We firmly believe that SBI Card is nota pure play NBFC, so valuing it on P/E may also make sense. At higher price band, the company is demanding a P/E multipleof 50.3x (to its restated TTM EPS of Rs. 15). Based on FY22E EPS, the demanded P/E comes out to be 39.4x.
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