Buy SBI Cards and Payment Services, target price Rs 1050: Axis Securities

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Buy SBI Cards and Payment Services, target price Rs 1050:  Axis Securities


Axis Securities has buy call on with a target price of Rs 1050. The current market price of SBI Cards and Payment Services is Rs 932.8.

Time period given by analyst is month when SBI Cards and Payment Services Ltd. price can reach defined target.

SBI Cards and Payment Services Ltd., incorporated in the year 1998, is a Small Cap company (having a market cap of Rs 88138.41 Crore) operating in Financial Services sector.

SBI Cards and Payment Services Ltd. key Products/Revenue Segments include Fees & Commission Income, Interest, Other Services, Sale of services and Commission for the year ending 31-Mar-2022.

Financials

For the quarter ended 30-06-2022, the company reported a Standalone Total Income of Rs 3262.85 Crore, up 8.18 % from last quarter Total Income of Rs 3016.10 Crore and up 33.13 % from last year same quarter Total Income of Rs 2450.94 Crore. Company reported net profit after tax of Rs 626.91 Crore in latest quarter.

Investment Rationale
Robust business momentum, improving NIMs, and muted credit costs will help SBIC deliver superior RoA/RoE of 6-6.3%/27-28% over the medium term. However, owing to intensive competition, especially from the Pvt. banks, maintaining and improving market share will be challenging and remain a key monitorable. The RBI’s proposal on linking of RuPay Credit cards with the UPI is structurally positive for the credit card industry as it will help in increasing the acceptance of Credit cards amongst UPI merchants. This, in turn, would enable credit card issuers to tap into the wallet share of UPI customers or allow the migration of UPI customers to credit cards along with improving the market penetration of credit cards. With over 1 Mn RuPay cards, SBIC should be a key beneficiary of the proposal. The RBI in its recently released discussion paper has touched upon a possible cap/regulation of MDR on credit cards, which if implemented, could impact fee income/profitability. However, the brokerage awaits further clarity in the final guidelines from the regulator in this regard.

Promoter/FII Holdings
Promoters held 69.64 per cent stake in the company as of 30-Jun-2022, while FIIs owned 8.29 per cent, DIIs 16.24 per cent.

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