SBI Cards is down as Carlyle dumps shares but the credit cards business is bouncing back
Business Insider India
- SBI Cards is the second largest issuer of credit cards in India.
- As of July 2021, every fifth credit card issued in India was by SBI Cards.
- With the company’s credit card business bouncing back, find out what analysts have to say.
The slump in SBI Cards’ share price today is on expected lines, since Carlyle Group’s price band was ₹1,021-1,072. Shares were trading around ₹1,025 as of 11:00 a.m., on September 21.
The Carlyle Group held a 15.89% stake in SBI Cards when the company listed on the Indian stock exchanges in March 2020. Since then, it has pared its stake multiple times, and with the most recent sale, its holding is down to 3.14%.
However, for existing investors in the company, there’s good news on the horizon.
Analysts at Edelweiss are bullish on the company and its future prospects. “We view SBI Cards as a concept stock offering high-growth and high-returns by the only listed player of its kind for a foreseeable future. It would thus sustainably command a premium accorded to few Indian stocks,” stated an Edelweiss report dated September 15.
It's not just the analysts at Edelweiss who are bullish on the company. Here are a few brokerage recommendations for SBI Cards:
Credit card business is bouncing back
SBI Cards posted a strong comeback in the June quarter, reporting a sharp jump in earnings and lower provision for bad debts.
AdvertisementHere’s a quick look at some of the key metrics of SBI Cards’ financial performance:
Source: Company reports
|Net interest income||₹924 cr||₹828 cr||₹1,138 cr|
|Net profit||₹3,046 cr||₹1754 cr||₹3,933 cr|
While its performance is still not back to the levels of the previous year, SBI Cards has posted a substantial improvement across all the three metrics compared to the previous quarter.
AdvertisementAnalysts at Motilal Oswal predict that it’s only going to get much better from here onwards.
Source: Motilal Oswal
|Net interest income||₹4,006 cr||₹3,884 cr|
|Net profit||₹1,664 cr||₹985 cr|
Given that SBI Cards is the second largest credit card issuer in the country, it bodes well for both the company as well as its shareholders.
“Spends have started showing a gradual improvement from Jun’21. The same is likely to rise further, as economic activity picks up and restrictions ease,” stated a Motilal Oswal report dated July 24.
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