SBI Group stock to buy now for an upside potential of 79%; Do you own it?

The shares of a Credit Card Service provider engaged in issuing credit cards to consumers in India are in focus after Foreign Brokerage firms HSBC and Macquarie have upgraded the stock setting a 12-month target price of Rs 1,000. 

Share Price Movement

The shares of SBI Cards and Payment Services Ltd, with a market capitalization of Rs 80,950.71 Crores, on Monday closed at around Rs 851 per share which was 0.94% lower than the previous closing price of Rs 859 apiece. 

The shares generated a return of 18.4% in the past 1 year, and 29.4% in the past 5 years respectively.

What Happened

Foreign Brokerages firms HSBC and Macquarie have upgraded the stock by setting a 12-month target price of Rs 1000 per share. 

HSBC upgraded the stock from its “Reduce” rating to “Buy” rating, while raising its target price to Rs 1000 from its previous target price of Rs 560, with an upside potential of 79%. The Brokerage stated that an improved card issuance and softening money market rates along with other positive factors contributed to the upgrade. 

The recent repo rate cut and open market operations along with tax cuts are favourable for SBI cards. “Improvement in card issuance, softening money market rates are positives. Credit cost drop could drive sharp EPS upgrades,” HSBC stated. 

Similarly, Macquarie upgraded the stock from its “Neutral” rating to “Outperform” rating last week. The Brokerage raised its target price from Rs 735 to Rs 1,000. Macquarie stated that credit card slippages are stabilizing and credit costs might start declining materially in the next two quarters. 

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Q3FY25 Results

The company’s PAT declined 30% YoY from Rs 549 Crores in Q3FY24 to Rs 383 Crores in Q3FY25. Its total income slightly increased from Rs 4,742 Crores to Rs 4,767 Crores over the same period. The Gross NPA rose YoY to 3.24% and Net NPA also increased to 1.18% in Q3FY25. 

The company sourced 11.75 Lakhs new accounts during Q3FY25, and also crossed the 2 Crore milestone in terms of cards in force.

About SBI Cards & Payment Services Ltd

SBI Cards and Payment Services Limited is a subsidiary of State Bank of India. It is the second largest credit card issuer in the country. The Company offers financial access through a wide range of value-added payment products and services that fulfill transactional and credit requirements. It focuses on delivering a diverse portfolio of credit cards which includes super premium cards, premium cards, travel and shopping cards, corporate cards, etc. 

Written By Adhvaitha Nayani

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