Domestic brokerage and research firm Yes Securities believes that being the only listed pure-play credit card issuer with significantly higher profitability than banks and NBFCs (in good times as well as bad times), SBI Cards and Premium evaluation of paid services will continue. ,
Brokerage house retains its buy rating SBI Card Shares with a target price of 1,210, implying a potential increase of around 45% from the current stock level. SBI Card shares are down 10% this year (YTD).
“Despite the pendency of RBI’s discussion paper on review of digital payment charges, we reiterate our bullish stance on SBI Cards, which is encouraging key trends in business matrices,” the note said.
According to Yes Securities, the recent stock price fall of SBI Cards represents extreme concerns over the reduction in MDR and lack of flexibility to offset it, structural pressure on cost-returns/profits from increasing competitive intensity, and rising of new Impact on growth from scale. Age Card Companies Buy Now Pay Later (BNPL).
The brokerage said, “We believe that the card acquisition/spending growth for SBI Cards is low penetration/expansion in the market, strong open market acquisition channel and substantially untapped Banca channel (at <5% in SBI's potential client base). entry) will remain strong." added.
Yes Securities highlighted that SBI Cards has witnessed a sharp improvement in both retail and corporate spending in the recent quarters and across various spending categories/channels. Even the travel and entertainment segment has seen a boom in the last few months.
Retail and corporate spending will continue to grow on the back of improving economic activity, stronger card additions, recovery of active rate of 30-day spending and increase in average transaction size, it said. “SBI cards offer high profitability across different cycles and thus deserve higher valuations.”
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.