Buy SBI Cards and Payment Services; target of Rs 960: HDFC Securities

HDFC Securities is bullish on SBI Cards and Payment Services has recommended buy rating on the stock with a target price of Rs 960 in its research report dated April 28, 2023.

Broker Research

May 02, 2023 / 08:39 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on SBI Cards and Payment Services

SBI Cards’ (SBICARD) earnings were marginally below our estimates due to higher-than-expected credit costs, partially offset by healthy traction in fee income. While the QoQ receivables mix remained steady with Revolve/EMI loans at 24%/37%, NIMs declined 10bps QoQ (11.5%) and are close to bottoming out with renewed management focus on raising the share of instalment loans. Business momentum remained strong in terms of card acquisitions (+22% YoY) as well as retail per-card spends (+11% YoY). Asset quality witnessed marginal deterioration with GS-III at 2.4% and credit costs at 6.3% (20bps one-off impact from change in ECL estimates).

Outlook

We marginally reduce our FY24/FY25 earnings estimates to factor in lower revolve share, partly offset by lower credit costs and maintain BUY with a revised TP of INR960 (implied 25x FY25 EPS). We remain bullish on the overall credit card opportunity and the ability of SBICARD to deliver consistently superior profitability (5%+ RoA, 25%+ RoE).

For all recommendations report, click here