Shares of SBI Cards and Payment Services, a subsidiary of State Bank of India, surged over 5 per cent to hit fresh 52-week high of Rs 1,076.95 on Bombay Stock Exchange in intraday trade on Thursday. On the back of rise in share price, the market capitalisation of the credit card company briefly surpassed Rs 1 lakh crore for the first time on Thursday. The market capitalisation (m-cap) of SBI Cards surged to Rs 1.01 lakh crore, nearly 27 per cent of the market value of SBI, which stood at Rs 3.7 lakh crore.
SBI Cards shares have delivered a massive return of 117 per cent over the last nine months, from its 52-week low of Rs 495.25 as on May 22, 2020. The stock has jumped 62.93 per cent since its March 16, 2020 listing price of Rs 661. In the calendar year 2021, the SBI subsidiary has outperformed the market by rallying 27 per cent, as against a 7.5 per cent gain in the BSE benchmark Sensex.
On Thursday, SBI Cards and Payment Services shares opened higher at Rs 1,029.80 against the previous closing price of Rs 1,024.20 on the BSE. During the day's trade, the stock gained as much as 5.15 per cent to hit record high of Rs 1,076.95, before settling at Rs 1,062.90, up 3.78 per cent. The m-cap of the stock stood at Rs 99,968.45 crore at the end of the day's trade. In contrast, the BSE benchmark Sensex closed 379 points or 0.73 per cent lower at 51,324.
SBI Cards, which is currently positioned at 37th on the BSE, leaving behind Tata Motors, Shree Cement and JSW Steel, is among top-performing stocks following the outbreak of COVID-19 as fast adoption of digitisation in light of the pandemic lured investors towards the stock, even as its parent company State Bank of India (SBI) received a muted response.
Most of the analysts have been bullish on the credit card business of SBI Card, citing strong revenue growth led by rising and underpenetrated pay card business. The only listed credit card company in India had posted revenue of Rs 2,540 crore during October-December 2020, against Rs 2,563 crore in the year-ago period. Net profit, however, fell by 52 per cent to Rs 210 crore as compared to net profit of Rs 435 crore in the same period last year.
The credit card arm of SBI, has recently received Rs 450 crore of long-term funds from its parent. The second-largest card issuer in the country after HDFC Bank got this money at an attractive fixed interest rate of 6.0 per cent per annum for a period of 5 years.
SBI Cards was established as a joint venture between SBI and GE Capital some 23 years ago. Three years ago, SBI and private equity player Carlyle Group had acquired the GE's stake. Currently, the shareholding is 74 per cent and 26 per cent, respectively, between the two institutions.