SPA Securities IPO report on SBI Cards
SBI Cards is a systemically important non deposit taking NBFC with an extensive credit card portfolio spread across individual and corporate card holders with a market share of 18.1% of the Indian credit card market in terms of the number of credit cards outstanding as of November 30, 2019, and 17.9% market share of the Indian credit card market in terms of total credit card spends in the eight months ended November 30, 2019. The company deploys a sales force of 32,677 outsourced sales personnel, operating out of 145 Indian cities. They also have presence in 3,190 open market points of sale across India. In addition, the partnership with SBI provides access to SBI’s extensive network of 21,961 branches across India and customer base of 445.5 million.
Valuation and Outlook
The company has registered a topline CAGR of ~ 37% from FY2014-2019. The issue price discounts FY20E earnings at ~46x. We believe it's a unique franchise, with strong parentage, with most major growth levers probably behind us but with low penetration levels within the industry and SBI cards being one of the proven leaders in the space, we recommend to subscribe to the issue as a good long term investment.
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