YES Securities has come out with its report on SBI Cards. The research firm has recommended to "Subscribe'' the IPO in its research report as on February 26, 2020
YES Securities IPO report on SBI Cards
The Rs100bn+ IPO of SBI Cards represents a unique proposition for investors in multiple ways viz. a) first credit cards/payments company to get listed (only proxy to the fast-growing digital payments space), b) company is the 2nd largest credit card issuer with 18% market share in cards outstanding and spends, c) demonstrated faster business growth than industry (card spends grew 54% v/s industry’s 36% over F17-19) without dilution in asset quality and profitability metrics, aided by a diversified cards portfolio and tapping potent acquisition channels/markets (co-branding and SBI branches/ Tier 3-4 locations and non-salaried customers), d) ability to deliver 6% RoA and 30% RoE with a conservative Tier-1 capital ratio of 16-17%, and e) strong promoter SBI (69.5% stake post-issue) and a low free-float of 14.5% (rest 16% held by Carlyle Group).
Valuation and Outlook
Second largest credit card issuer in India with deep industry expertise and a demonstrated track record of growth and profitability. Diversified customer acquisition capabilities. Support of a strong brand and pre-eminent promoter - SBI . Diversified portfolio of credit card offerings. Advanced risk management and data analytics capabilities. Modern and scalable technology infrastructure. Highly experienced and professional management team.
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