SBI Cards hits 52-week high as it raises Rs 500 crore via debt instruments
Shares of SBI Cards and Payment Services hit a fresh 52-week high, up 1.4 per cent, at Rs 815 on the BSE on Tuesday after the State Bank of India subsidiary raised Rs 500 crore via debt instruments.
“The company has approved the allotment of 5,000 Fixed Rate, Unsecured, Rated, Taxable, Redeemable, Senior, Non-Convertible Debentures (“NCDs”) of the face value of Rs 1,000,000 each, at par, under Series 21, aggregating to Rs 500 crores on private placement basis,” it said in a regulatory filing. READ HERE
The debentures offer coupon rate of 5.75 per cent and will mature on November 17, 2023, it added.
For June quarter of FY21, SBI Cards had posted a 13.80 per cent year-on-year (YoY) growth in net profit at Rs 393.29 crore for the quarter ended June 30. It had posted a net profit of Rs 345.59 crore in the corresponding quarter last year. Besides, total revenue from operation increased 4 per cent YoY to Rs 2,152.20 crore during the quarter under review as against Rs 2,068.28 crore in the corresponding quarter last year.
“An all-round performance and incredibly lower moratorium value (down 79 per cent MoM in Jun’21) sum up Q1FY21 performance for SBI CARD. Company’s focus on non-discretionary and digital spends translated into healthy loans (Rs 23,300 crore vs estimated Rs 21,700 crore) and average daily spend defying lockdown challenges… We see SBI CARD geared to return to normalcy sooner than expected with the emergence of green shoots, improving corporate spends led by non-discretionary focus and increasing banca potential,” said analysts at Prabhudas Lilladher in a post-result report.
“SBICARDS’s businesses are slowly returning to pre-COVID days as the lockdown eases. New card accounts increased from 28,000 in April-20 to 181,000 in Jun-20. Moratorium balance decreased to Rs 1400 crore in Jun-20 from Rs 6700 crore in April-20. Recoveries have increased to Rs 21 crore in June-20 from Rs 6 crore in April-20. It’s trading at 10.9x FY21E P/B based on Bloomberg consensus vs 3.5x its US peer American Express (AXP US NR), and 3.5x for Thai peer Krungthai Card PCL (KTC TB NR),” said analysts at Maybank Kim Eng in a report dated August 2.
They believe SBICARDS is well-capitalised with a CAR of 24.4 per cent as at Jun 2020 against a minimum capital requirement of 15 per cent for non-banking financial companies (NBFC). “SBI Card’s stock price has risen 10 per cent since its listing in Mar-20 vs 18 per cent decline in the NIFTY NBFC sector due to asset-quality concerns as a result of the pandemic. SBI Cards has a strong pedigree with SBIN as its largest shareholder and promoter. It has over two decades of existence and has built deep expertise in underwriting. Increased demand for credit cards and push towards digitalisation can act as key catalysts for the stock,” they add.
Those at Axis Securities, meanwhile, believe that the long-term growth story of SBI Cards remains intact due to its unique positioning and huge scope for growth even as FY21 appears to be a tough year for the company because of the huge economic disruption leading to a short-term impact in business momentum.
SBI Cards is the largest pure-play credit card issuer in India having deep expertise in India’s credit card market as a result of its 20+ years’ operating history. SBI Cards is the second-largest credit card issuer in India both in terms of number of credit cards outstanding and amount of credit card spends, with 10.5 mn credit cards outstanding as of FY20 (CAGR of 24.3 per cent over FY14)