SBI Cards & Payment (SBICARD IN): Reduce: Core business metrics remain compromised

Research evidence excerpt

SBI Cards & Payment (SBICARD IN): Reduce: Core business metrics remain compromised

rrent AUM/EPS growth

outlook also compares poorly to peers and to its own historical numbers. We value the 52-WEEK PRICE (INR)

stock at INR510/share (at 2.3x FY28e BVPS, unchanged) and retain our Reduce rating. 1000.00

Tweak earnings, but PPOP remains under pressure: We upgrade EPS by 725.00

11.8%/1.5% for FY27/28e, primarily to reflect the lower credit costs the company is now 450.00

reporting. We build in a c575bp credit cost for FY27/28/29e (from 660/610/600bp for 07/25 Target price:01/26510.00 07/26

FY27/28/29e earlier). For SBICARD, the average credit cost over FY15-26 is c660bp. High: 937.95 Low: 568.25 Current: 645.00

Even accounting for lower revolvers than in the past, a credit cost of 575bp is potentially Source: LSEG IBES, HSBC estimates

close to through-the-cycle levels. It may undershoot its average levels for a few quarters

but should normalise thereafter. There is also pressure on margins and fee income. Abhishek Murarka* Senior Analyst, India Financials

Hence, we cut our PPOP estimate by 1.0-2.2% for FY27-29e. We believe PPOP cuts are HSBC Securities and Capital Markets (India) Private

Limited

still in the offing, given a potential rate hike over the next 6-9 months, declining revolver abhishek.murarka@hsbc.co.in

balances and pressure on fees. We now forecast a 12% EPS CAGR over FY26-29e. +91 73049 07567

Key observations from the results: Spend grew by 3% q-o-q with a pick-up in retail Rahil Shah* Analyst, India Financials

spend (up 5% q-o-q). NIM compressed 30bp q-o-q, cost to income rose c150bp q-o-q, HSBC Securities and Capital Markets (India) Private

while net credit cost improved by 90bp q-o-q to 5.5% in 1QFY27. rahil.shah@hsbc.co.in

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