SBI Cards and Payment Services Ltd. share price target

Q1 credit cost climbed 130bps YoY to 7.1% of loans (calc.) owing to stress from customers acquired in CY19, inducing a 5% fall in net profit

SBI Cards (SBIC) delivered strong PAT of Rs 6 bn in Q4FY23 and Rs22.6bn in FY23 representing 27% CAGR over the last 5 years. This is post the impact of external
overhangs of declining NIMs, loss in fees due to implementation of RBI master
circular issued in Oct’22 and the impact of covid.

Q4 PAT beat our estimate by 10% due to robust revenue (+32% YoY), partially offset by higher credit cost (+60% YoY)

There is no change in the business prowess of SBI Cards (SBIC) considering the spends growth and its relative market share in CIF/spends. However, there were external overhangs of declining NIMs and loss in fees due to implementation of RBI master circular.

Q3 PAT missed our estimate by 8% due to increased funding costs and high operating expenses

SBI Cards (SBIC) reported 3% QoQ dip in PAT in Q3FY23 primarily on account of lower NIMs (subdued revolver mix and higher cost of funds), lower instance-based fees (removal of Over-limit (OVL) fees) and higher cost to income (higher acquisitions and more corporate spends) partially offset by lower credit cost.