SBI Card share price has surged by 20% in July so far as India’s second largest credit card issuer beats lockdown blues

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SBI Card share price has surged by 20% in July so far as India’s second largest credit card issuer beats lockdown blues
Representational image.Prerna Sindwani / Business Insider India
  • SBI Card is back near its IPO price after the recent rally
  • The fear of mass defaults by credit card users has come undone — only about a quarter of all customers sought moratorium.
  • Macquarie, in its June report, said the stock could hit ₹900 in the next one year.
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The SBI Card share price is back near its issue price after a lackluster initial public offering (IPO). In July alone, SBI Card shares have surged by nearly 20%, suggesting that the second largest credit card issuer in India is coming out of the lockdown blues.

The SBI Card share price hit a low of ₹495 in May. However, since then, it has shown an upward trend, surging by more than 50%. Analysts expect a further upside of over 20%, with a target price of ₹900.


SBI Card is scheduled to report its June 2020 quarter earnings later today.

Brokerage firmTarget priceUpside
Axis Capital₹7501%
Macquarie₹90021%

Note: Upside as compared to current price of ₹643.8 as of July 20, 12:30 PM.

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SBI Card share price has surged by 20% in July so far as India’s second largest credit card issuer beats lockdown blues
SBI Card share priceBSE / Business Insider India / Flourish

Analysts are upbeat about SBI Card

One of the reasons for SBI Card share price plummeting after the IPO was the fear of defaults due to the COVID-19 lockdown.

However, according to data provided by Axis Capital, the damage has been limited.

PeriodRepayments by customers availing moratorium
March25%
April24%

Source: Axis Capital

According to Axis Capital report dated June 18, a quarter of the customers who availed debt moratorium have repaid their dues to SBI Card. On the corporate side, only two companies have availed moratorium.
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Another reason for analysts being bullish on SBI Card is that the Indian credit card market is underpenetrated. According to a Bank of America Securities report, India has the lowest credit card penetration at just 3%.

SBI Card share price has surged by 20% in July so far as India’s second largest credit card issuer beats lockdown blues
India's credit card penetration.BofA / Business Insider India / Flourish

Credit card spends in India are forecast to cross ₹15 lakh crore (approx. $200 billion) in the next five years. This presents an immense potential to credit card companies to grow in terms of revenue as well as market share.

“We raise FY21/22 earnings per share [forecast] by 16%/9% respectively. Thus, we raise our target price by 18% to ₹900,” brokerage firm Macquarie said in a report.

SEE ALSO:

SBI Card profit gets squeezed by bad loans, impairment charge, and a big provision for COVID-19

Here's why SBI Cards share price may jump 30% in the next one year, according to Bank of America-Merrill Lynch

SBI Card has surged 40% as lockdown blues blow over ⁠— but those who got shares in the IPO are still in the red