Share price of SBI Cards and Payment Services lost nearly 16% to hit its all-time low on Monday after the 30 day lock-in period for anchor investors came to an end. SBI Cards share price which has been trading below its listing price since March 23, plunged 15.73% to Rs 501 intra day on BSE. The large cap stock closed 15% lower at Rs 505.60 on April 13.
The stock has lost 33.11% compared to its issue price of Rs 755 per share. With country's second-largest credit card issuer falling 23% below its listing price of Rs 658 within a month of its debut, investors are in a dilemma whether they should wait for the stock to fall further or enter it at current level.
Jaikishan Parmar, senior equity research analyst at Angel Broking said, "Primary reason behind the correction is the lockdown to contain the spread of Covid-19 novel coronavirus. As many businesses are standing still, credit card spend has dropped considerably. Overall, it will impact the growth of loan books and asset quality issues to emerge. IPO valuation was factoring high growth and stable asset quality. During this lockdown, quality growth is not possible and asset quality will only deteriorate. Hence, correction is factoring lower growth and increased slippages. Investors should wait and watch till a better clarity emerges on the lockdown's impact on the economy."
Those who have held the stock since its listing are sitting on a loss of 23.25%. The stock listed at Rs 658 on BSE on March 16 this year. On NSE, the share made its debut at Rs 661, a discount of 12.45% to the issue price.
Rahul Agarwal, Director, Wealth Discovery/EZ Wealth said, "The ongoing nationwide lockdown has brought business to a standstill and threatens large-scale unemployment, which could lead to increased credit card defaults. Also, in such unpredictable environment, it is natural that consumers get cautious on their discretionary spending and tend to spend less and therefore credit card transactions are expected to fall. The SBI Card business has sound fundamentals and growth potential.
However, given the current business scenario and weak market conditions, it might take some time before the stock sees a sharp recovery. Hence, investors willing to put in fresh capital into the stock should wait till the dust settles. Investors with some risk appetite and long term outlook can start accumulating this stock in a staggered manner at these levels."
SBI Cards IPO, which was held from March 2 to March 5, was subscribed 26.54 times on its last day despite weak market conditions. The IPO which initially attracted lot of investor attention could not deliver listing gains due to crash in global and domestic markets.
Global and domestic markets had started feeling the effect of slowdown due to rising number of coronavirus cases across the world. SBI Cards IPO hit the market when Nifty was down 8% and Sensex had lost over 7% since the beginning of this year.