Shares of SBI Cards and Payment Services fell for the second straight session today after the arm of country’s largest lender SBI reported December quarter earnings that came below expectations. SBI Cards and Payment Services stock slipped 3.75% intraday to Rs 718.25 against the previous close of Rs 746.20 on BSE. The stock has lost 6.5% in two sessions taking into account the intraday low today.
SBI Card stock opened lower at Rs 744.95 on BSE today. In the previous session, the stock fell up to 4.63 per cent intraday to Rs 731.60 after the earnings announcement.
The share has lost 14.48 per cent in one year and fallen 8.54 per cent since the beginning of this year. Total 0.84 lakh shares of the firm changed hands amounting to a turnover of Rs 6.11 crore on BSE. Market cap of the firm fell to Rs 68,482 crore.
In terms of technicals, the relative strength index (RSI) of SBI Card stock stands at 34, signaling neither the stock is overbought nor oversold. The stock has a one-year beta of 1.1, indicating high volatility during the period. The PE ratio of SBI Card stands at 33.30. SBI Card shares are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
SBI Card reported a 32.1 per cent rise in net profit to Rs 509 crore in Q3 of the current fiscal. In the year-ago period, it had reported a net profit of Rs 386 crore. Total revenue climbed 16% YoY to Rs 3,656 crore against Rs 3140 crore in the Q3 of previous fiscal.
Prabhudas Lilladher saw SBI Card reporting a net profit of Rs 553.7 crore, up 43.5% year-on-year (up 5.3% quarter-on-quarter). Net Interest Income (NII) was expected to rise 23.3 percent Y-o-Y (up 10 percent Q-o-Q) to Rs 1,228.2 crore, according to Prabhudas Lilladher.
Interest income rose by Rs 336 crore to Rs 1,609 Cr for Q3 against Rs 1,273 Cr for Q3 FY22. Income from fees and services rose Rs 213 crore to Rs 1,670 Cr for Q3 FY23 against Rs 1,457 crore in the corresponding quarter of the last fiscal.
Gross non-performing assets (NPAs) fell to 2.22% of gross advances as on December 31, 2022 as against 2.40% as on December 31, 2021. Net non-performing assets were at 0.80% as at December 31, 2022 as against 0.83% as on December 31, 2021.
Akshay Ashok – Research Analyst, Prabhudas Lilladher said, "We maintain ‘Accumulate’ rating and decrease our targhet price to Rs 935 (34x on PE Sep’24E results) from Rs 1,013 (earlier:34x PE Sep’24E results) as we decrease our FY24/25 net interest income estimates by 7.3%/14.7%, given increase in cost of funds to 6.5%/6.6% for FY24/25 (from 5.7%/5.8% earlier). We believe that when EMI assets in receivables mix starts to increase (currently at 61%), there can be improvement in yields that can negate higher cost of funds. Re-rating can happen as the revolver mix edges higher and company continues to increase focus on EMI assets. Maintain ‘Accumulate’."
YES Securities has lowered its price target to Rs 940 and assigned an add call to the SBI Card stock. The target price amounts to an upside of 26.1% compared to the current market price of Rs 745.
YES Securities said, “Our earnings estimates are largely unchanged, notwithstanding underwhelming trends in receivables, NIM, fees and operating expenditure, due to reinstatement of assumed regulatory MDR reduction (there has been a prolonged silence from RBI). However, the re-rating of stock (trades at six times FY24 P/ABV) would be contingent on improvement in RoA/RoE outlook. We maintain ADD rating while lowering 12-month price target to Rs 940 on trimming the target multiple.”
Financial services firm Motilal Oswal too has lowered its target price for the stock after Q3 earnings.
"We cut our estimates by 5-7% to factor in lower NII and slightly higher provisions. We estimate SBI Card to deliver a 34% earnings CAGR over FY23– 25, leading to RoA/RoE of 6.5%/27.9%. Maintain Buy with a target of Rs 960," said Motilal Oswal.
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