SBI Card Shares Fall Over 7% As Q2 Results Fails To Impress D-Street; Should you Buy?

SBI Card Share Price: On the bourses, shares of the State Bank of India arm SBI Card tumbled 7.4 per cent to Rs 732 apiece on the BSE in the intraday trade as investors factored in near-term concerns.

SBI Card shares fell as much as 7.45 per cent to Rs 732.05 apiece on the BSE. The stock traded below its IPO price of Rs 755 per share.

The company reported a 15 per cent increase in its net profit for Q2FY24 at Rs 603 crore from Rs 526 crore in the year-ago quarter. The interest income grew 28 per cent to Rs 1,902 crore, while income from other sources jumped 21 per cent to Rs 2,186 crore.

There was a slight deterioration in the company’s asset quality with the gross non-performing assets rising to 2.43 per cent of the gross advances as of September, from 2.14 per cent a year earlier.

Net NPAs (bad loans) also rose to 0.89 per cent from 0.78 per cent in the corresponding quarter of last year.

Should you buy, sell or hold SBI Card’s stock? Here’s what analysts say:

SBI Cards and Payment Services Limited indicated that it is keeping close track of its portfolio while taking corrective measures to limit incremental stress. The company lost some market share in spends, possibly due to th edevaluation of the high-selling cashback card, domestic brokerage Emkay Global said.

Goldman Sachs said the management commentary was worrisome, with stress building in unsecured loans. The global brokerage flagged concerns about the company’s overall earnings, calling it “poor quality” with NIM below estimates on higher-than-expected credit costs.

Jefferies maintained its “buy” call on the company but cut the target price to Rs 1,020. Unlike Goldman Sachs, Jefferies said the calculated NIM was steady but might dip in the upcoming quarter on the higher cost of funds. Credit costs may take longer to recover due to the uptick in stress in unsecured loans.

However, as per Motilal Oswal, on the positive side, spending growth remains healthy while the company maintains a healthy traction in new card additions.

“Reversal in rate cycle, and lagged improvement in revolver mix remain the key triggers. These would support 35 per cent earnings CAGR over FY24-26E while earnings growth for the current fiscal to remain modest,” it said.