SBI Cards shares are up by 24% this year despite severe correction in Indian markets; Here’s Why?

Since the listing of SBI Cards in primary markets during the start of the Covid-19 Pandemic. Stock listed at the price of Rs. 661, down 12.45 percent from its Issue price of Rs. 755. Since then, the stock has severely underperformed the markets, giving only 12 percent returns in 5 years from its IPO price.

But, from the start of this year, Nifty 50 has declined by more than 5 percent, but SBI Cards has given a return of 24 percent. Outperforming the markets during a major decline.

Reasons for Rise in Share Price

The recent Interest rate cut and the upcoming rate cuts from RBI will be a big positive for the company, as credit card companies usually don’t decrease their Interest rates quickly as they are not pegged with the repo rate.  But the company’s borrowing costs will decrease as they take out loans to give credits to their customers, which are pegged to the repo rates.

The recent Income tax cuts will also be beneficial for the company, as customers are likely to increase their spending and consumption, which will lead to increased credit card usage.

Company also holds a dominant position, with a market share of 18.7 percent in Credit cards and is the second largest credit card issuer in the Country and the only pure play credit card company listed in the Indian Stock exchanges. They are promoted by India’s Largest Bank SBI.

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Financial Highlights

The company reported a negligible decrease of 0.06 percent YoY in revenue from Rs. 4,622 Crore in Q3FY24 to Rs. 4,619 Crore in Q3FY25. On a QoQ basis, the company reported an increase of 4.47 percent in revenue from Rs. 4,421 Crore in the previous quarter.

Their Net profit saw a decrease of 30.23 percent YoY from Rs. 549 Crore to Rs. 383 Crore for the same period. On a QoQ basis, the company reported an increase of 5.19 percent in Net profit from Rs. 404 Crore in the previous quarter.

About the Company

SBI Cards & Payment Services Limited (SBI Card) is one of India’s largest credit card issuers and a subsidiary of the State Bank of India (SBI). Established in 1998 and headquartered in Gurugram, the company offers a diverse range of credit cards catering to lifestyle, travel, shopping, fuel, and corporate needs. 

Written By Abhishek Das

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