SBI Cards shares fall over 6% post Q2 earnings; time to buy, sell or hold?
SBI Cards stock opened with a loss of 2.17 per cent at Rs 839 against the previous close of Rs 857.60 on BSE. The stock fell up to 6.71 per cent intraday to Rs 800 on BSE.
- Oct 28, 2022,
- Updated Oct 28, 2022 11:13 AM IST
Shares of SBI Cards and Payment Services slipped over 6 per cent in early trade today after the September quarter earnings of the firm missed estimates. SBI Cards reported a 52 per cent rise in net profit to Rs 526 crore in Q2 of the current fiscal. In the year-ago period, it had reported a net profit of Rs 345 crore. Analysts at Bloomberg had predicted a net profit of Rs 627 crore. Motilal Oswal Financial Services expected profit to rise 71.8 per cent to Rs 590 crore in the last quarter. Analysts at Kotak Institutional Equities also expected SBI Cards to report a 72.74 per cent rise in profit to Rs 595.8 crore in Q2.
SBI Cards stock opened with a loss of 2.17 per cent at Rs 839 against the previous close of Rs 857.60 on BSE. The stock fell up to 6.71 per cent intraday to Rs 800 on BSE. SBI Cards shares are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The share has lost 27.8 per cent in one year and fallen 12.51 per cent since the beginning of this year. Total 0.56 lakh shares of the firm changed hands amounting to a turnover of Rs 4.58 crore on BSE. Market cap of the firm fell to Rs 76,335 crore.
ALSO READ: SBI Cards and Payment Services shares rise ahead of Q2 earnings, here's what to expect
Total income rose 28 per cent year-on-year (YoY) to Rs 3,453 crore in Q2 as interest income rose by 26.5 per cent, fees and services income rose by 29.5 per cent, and other income grew 31 per cent YoY. Impairment losses and bad debts declined 8 per cent YoY to Rs 546 crore, but increased 21 per cent sequentially. Morgan Stanley is overweight on the stock with a target price of Rs 1,100.
Net profit miss was driven by higher costs (due to higher gross card acquisition) & higher stage 1 provisions on higher transactor balances.
Morgan Stanley said, absolute growth in receivables was healthy while higher funding costs could weigh on net interest margins.
CLSA has assigned a sell call with a target price of Rs 795. Growth was healthy but there was a double-whammy on NIMs. The company had a market share loss. Operating expenditure at 8% was above estimates. Credit costs were a negative surprise, said CLSA.
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Credit Suisse cut the target price to Rs 1,080. The firm had strong growth trends in Q2. Credit Suisse expects growth to remain strong, led by new card additions and spends growth. The brokerage cut its FY23-35E EPS by 4%.
YES Securities has assigned a target price of Rs 1,020, a 19 percent upside against the current market price of Rs 858. The brokerage gave an add rating and cut earnings by 6-8 per cent for FY23/24 and now expect average RoA/RoE delivery of 5.3%/24% (have baked some impact of possible MDR reduction).
"We move recommendation to ADD from BUY as the firm will need to tightly manage spend market share and profitability going ahead. Valuation at 7x FY24 P/ABV leaves little room for any incremental disappointments," said YES Securities.
Shares of SBI Cards and Payment Services slipped over 6 per cent in early trade today after the September quarter earnings of the firm missed estimates. SBI Cards reported a 52 per cent rise in net profit to Rs 526 crore in Q2 of the current fiscal. In the year-ago period, it had reported a net profit of Rs 345 crore. Analysts at Bloomberg had predicted a net profit of Rs 627 crore. Motilal Oswal Financial Services expected profit to rise 71.8 per cent to Rs 590 crore in the last quarter. Analysts at Kotak Institutional Equities also expected SBI Cards to report a 72.74 per cent rise in profit to Rs 595.8 crore in Q2.
SBI Cards stock opened with a loss of 2.17 per cent at Rs 839 against the previous close of Rs 857.60 on BSE. The stock fell up to 6.71 per cent intraday to Rs 800 on BSE. SBI Cards shares are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The share has lost 27.8 per cent in one year and fallen 12.51 per cent since the beginning of this year. Total 0.56 lakh shares of the firm changed hands amounting to a turnover of Rs 4.58 crore on BSE. Market cap of the firm fell to Rs 76,335 crore.
ALSO READ: SBI Cards and Payment Services shares rise ahead of Q2 earnings, here's what to expect
Total income rose 28 per cent year-on-year (YoY) to Rs 3,453 crore in Q2 as interest income rose by 26.5 per cent, fees and services income rose by 29.5 per cent, and other income grew 31 per cent YoY. Impairment losses and bad debts declined 8 per cent YoY to Rs 546 crore, but increased 21 per cent sequentially. Morgan Stanley is overweight on the stock with a target price of Rs 1,100.
Net profit miss was driven by higher costs (due to higher gross card acquisition) & higher stage 1 provisions on higher transactor balances.
Morgan Stanley said, absolute growth in receivables was healthy while higher funding costs could weigh on net interest margins.
CLSA has assigned a sell call with a target price of Rs 795. Growth was healthy but there was a double-whammy on NIMs. The company had a market share loss. Operating expenditure at 8% was above estimates. Credit costs were a negative surprise, said CLSA.
Stocks in news: Maruti Suzuki, Vedanta, SBI Cards, Tata Chemicals and more
Credit Suisse cut the target price to Rs 1,080. The firm had strong growth trends in Q2. Credit Suisse expects growth to remain strong, led by new card additions and spends growth. The brokerage cut its FY23-35E EPS by 4%.
YES Securities has assigned a target price of Rs 1,020, a 19 percent upside against the current market price of Rs 858. The brokerage gave an add rating and cut earnings by 6-8 per cent for FY23/24 and now expect average RoA/RoE delivery of 5.3%/24% (have baked some impact of possible MDR reduction).
"We move recommendation to ADD from BUY as the firm will need to tightly manage spend market share and profitability going ahead. Valuation at 7x FY24 P/ABV leaves little room for any incremental disappointments," said YES Securities.