SBI Card

Expect yearly addition of cards to be 2.4 million – SBI Cards

Update on the Indian Equity Market:

On Thursday, NIFTY closed 0.5% lower at 17,618. Top gainers in NIFTY50 were Bajaj Finance (+2.1%), Bajaj Finserv (+2.1%), and Tata Motors (+1.0%). The top losers were Power Grid (-2.8%), Asian Paints (-2.3%), and Shree Cement (-2.2%). The top gaining sectors were Realty (+1.5%), Consumer Durables (+1.0%), and PSU Banks (+0.8%), while the top sectoral losers were Media (-0.9%), Metal (-0.9%), and Bank (-0.8%).

Experts of an interview with Mr. Rama Mohan Rao Amara, MD & CEO at SBI Cards aired on CNBC TV18 on 29th September 2021:

  • The industry has recorded strong spending at the aggregate level. SBI Cards crossed pre- pandemic levels in terms of run rate.
  • The company adopted sustainable strategy and leveraged on every opportunity that they have that is reflected in improvement in market share. Both channels- direct sources and the parent company SBI are contributing equally to improvement in market share.
  • The results of strategy they implemented are reflecting in their improvement in market share, the market share was improving steadily and they have aim for very sustainable performance. This has also helped in diversification of risk and profitability of portfolio.
  • Gradual unlocking has a positive impact on spends per card. In 1QFY22, online spends were contributing to the card spend. With the unlocking, point of sale (POS) contribution is increasing, discretionary spends improved due to categories like jewelry, apparel, and restaurant spends are increasing. Non-discretionary categories such as insurance, health and wellness are also contributing in a big way.
  • SBI Cards aimed for 10,000 new accounts per day and they reached that level and they maintaining it consistently. They have to manage attrition for net growth of the company.
  • SBI Cards has open market and banca customer channel in open market they have many collaborations.
  • He expects growth of around 4 million card additions in a year & India is still an underpenetrated market when it comes to credit cards.
  • They are planning to expand their market into tier-III and tier-IV cities with the help of their bank channels which beneficiary for SBI Cards in customer addition.
  • The market expansion in tier-III and tier-IV cities takes slightly longer time compared to tier-I and tier-II.
  • If they are growing at 2 million, then it is safe to presume that it will be five times minimum for the industry, he mentioned.

Asset Multiplier comments:

  • The company is expected growth in tier-III and tier-IV cities, which might be lucrative for the industry.
  • SBI Cards might be have an advantage than other peers are their branch channels in tier-III and tier-IV cities which beneficiary for SBI Cards in customer addition.
  • The risk from growth of the Fintech organizations might be contraction in the market share of SBI cards.

Consensus Estimate: (Source: market screener websites)

  • The closing price of SBI Cards was ₹ 1,027/- as of 30-September-2021.  It traded at 12x/ 10x/ 7x the consensus book value estimate of ₹ 84/108/139 for FY22E/23E/24E respectively.
  • The consensus price target is ₹ 1,185/- which trades at 9x the book value estimate for FY24E of ₹ 139/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

Recovery seen in June, growth momentum ahead – SBI Cards

Update on Indian Equity Market:

On Tuesday, markets ended lower with Nifty closing at 15,746 (-0.5%). HINDALCO (+4.3%), SBILIFE (+3.2%), and TATASTEEL (+2.7%) were the top gainers on the index while DRREDDY (-10.3%), CIPLA (-3.5%) and AXISBANK (-3.3%) were the top losers for the day. Among the sectoral indices, METAL (+1.5%) and PSU BANK (+0.4%) were the gainers, while PHARMA (-4.3%), PRIVATE BANK (-0.9%) and REALTY (-0.7%) were the top losers.


Excerpts of an interview with Mr. Rama Mohan Rao Amara, MD & CEO, SBI Cards on CNBCTV18 dated 26th July 2021:


  • The Company suffered stress from the 3rd week of April till mid-June. Reduction of lockdown restrictions provided the push for the company to ramp up sales and sourcing, and July shows further signs of progress.
  • The company’s New Account Acquisition in the first quarter was lower due to the lockdown effect, however, the company has achieved its run rate of 3,00,000 card issuance per month.
  • Consumer sentiment and discretionary spending are coming back to pre-pandemic levels. The company is optimistic about further growth in sourcing, which is mostly done through bankers, which was affected due to lockdown.
  • Average monthly spending per card was at Rs 11,000 but it’s slowly inching up to indicate increased levels of discretionary spending and rebounding of economic activity in July. The company expects it to grow to Rs 13,000-13,500 levels barring any major disruptions.
  • Recovery is seen in both distribution channels- Bankers and Open Market distributions. With the opening up of the economy further, the company expects to grow from its minimum run rate of 3,00,000 card issues per month by leveraging multi-channel partnerships that the company has developed.
  • 52-53% of FY21 sourcing was done through banker channels which leverages its presence in tier 3, tier 4 towns, and rural areas, indicative of an increased digital penetration in rural areas.
  • Expansion of E-commerce and other online platforms into rural areas has seen a shift to digital transactions across rural areas, which has helped the company tap into its existing banking customer base, which also helps the company keep a track of its delinquencies.
  • The impact of the entire Mastercard ban accounts for less than 2% of monthly sourcing for the company, so the company has little risk. Even so, the company is proactively negotiating with its partners to mitigate the effects.

Asset Multiplier Comments:

  • Credit Cards Industry in India, is in its nascent stages of penetration, and there’s tremendous growth potential with digital penetration in Indian Rural Markets a thrust area for everyone.
  • SBI Cards can leverage the SBI Brand and its penetration across India to unlock growth potential that can rarely be done so easily by any other of its competitors.


Consensus Estimates (Source: market screener website): 

  • The closing price of SBI Cards was ₹ 1,017/- as of 27-July-2021.  It traded at 54x/38x the EPS estimate of ₹19/₹ 27 for FY22E/23E.
  • The consensus price target of ₹ 1,184/- implies a 44x PE multiple for FY23E EPS of ₹ 27/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

SBI Cards will see rebound once the market settles: Hardayal Prasad, MD & CEO, SBI Cards

Update on the Indian Equity Market:

On Tuesday, NIFTY50 closed 2.5% lower at 8,967. All sectoral indices closed in the red except FMCG (+0.9%) and Pharma (+0.3%). Media (-5.9%), Financial Services (-4.6%) and Bank (-4.1%) were the top losing sectors. The Nifty 50 top gaining stocks for the day were Yes Bank (+59.3%), Hindustan Unilever (+3.1%) and Eicher Motors (+2.8%) while the losers were Zee Entertainment (-20.0%), IndusInd Bank (-9.2%) and ICICI Bank (-8.9%).

Excerpts from an interview with Mr Hardayal Prasad, MD & CEO, SBI Cards Ltd. (SBICARD) with CNBC -TV18 dated 16th March 2020:

  • About the share price bounce back: Mr. Hardayal said that in terms of return on equity (ROE), revenue and growth, when these minor blips of the market are overcome going forward, the company’s strength will come to the fore and they should see a strong rebound.
  • One of the biggest things is that the penetration of the credit card in India is very low, this gives SBI Cards a huge opportunity to grow.
  • According to him, the aspirations of tier II and III cities have still not been met. People want to spend, they have money. They want good things in life and they did not have the opportunities till a few years back. Now with the PoS infrastructure, with the e-commerce and so many other things happening, there is a big potential sitting over there. Thus, SBICARD feels the growth story in India will continue and the Company will continue to show robust growth.
  • He thinks other countries have seen massive penetration of credit cards into smaller towns. Thus, in India, if we leverage ourselves properly if we continue to have our policies right and have a good model, the Indian credit cards market will continue to see similar growth stories.
  • About the NPA concerns with credit card businesses, he said: In the last 10 years, since the last cycle has seen high NPAs and delinquencies, there has been a major shift in the way the business:
  1. India now has an absolutely robust and strong credit bureau which is very important for any country to manage delinquencies.
  2. IT infrastructure, which has been created all across.
  3. The overall modeling that is been done.
  4. The business is spread out. Earlier it was only in the metros; now it is spread out to Tier II and III cities. As many as 58% of the business is now coming from Tier-II cities. Now the leveraging that is there in tier II & III cities is pretty low.
  • So, he doesn’t think the kind of phenomenon one saw in post-Lehman times is there anymore. One can calibrate risks, control NPAs and can ensure good profitability.