SBI Cards shares tumble after brokerages slash targets

SBI Cards and Payments Services shares dropped sharply in opening trade on Friday as multiple brokerages slashed target price on the credit card firm's stock price. The sentiment in SBI cards dropped a day after the company declared its July-September quarter results wherein it posted a net profit if Rs 525.6 cr cr which surged 52.3 per cent year-on-year. The company had posted a net profit of 345 in the corresponding quarter of FY22.

At 9:45 am, SBI Cards shares were trading at Rs 814.95 on the BSE, down by 42.65 or nearly 5 per cent from the Thursday closing price. 

Key Highlights of Results: 

- Net Interest Income (NII) was up 21.5 per cent to Rs 1116.8 cr versus Rs 919 cr. The results were better than street's estmates of Rs 1100 cr. 

- Net Profit was up 52.3 per cent to Rs 525.6 cr verus Rs 345 cr in Q2FY22. 

- New Account Volume grew 36 per cent YoY 

- Spends were up 43 per cent to Rs 62306 cr versus Rs 43560 cr 

- Receivables were up 41 per cent to Rs 37730 cr versus Rs 26741cr 

- Gross Advances were up 20.6 per cent to Rs 37730 cr versus Rs 31281 cr 

- GNPA were down to 2.14 per cent versus 2.24 per cent  

- NNPA were at 0.78 per cent versus 0.79 per cent 

Brokerage View:

At least three brokerages - CLSA, JP Mogan and Goldman Sach have slashed their targets on this stock. While CLSA and Goldman Sach have recommended a Sell rating on the stock, JP Morgan maintains a netral rating.

Brokerages Morgan Stanley and Credit Suisse have taken a contrarian view on the stock with the former being 'Overweight' and the latter giving it an 'Outperformm' rating. Credit Suisse has reduced the target to Rs 1080 from Rs 1150. 

What is going against it? 

CLSA recommends a 'Sell' on this counter and cuts target to Rs 785 from Rs 830. It cites loss in market share loss as the biggest handicap for this counter despite spending showing a health trend. A hit on its Net Interest Margins (NIMs) is another spoilsport, opines the brokerage. 

What is working for SB Cards?

Brokerage firm Credit Suisse maintain an 'Outperform' rating with a price target cut to 1080 from 1150. It expects business growth to remain strong led by new card additions and spends growth. It also expects EPS growth to remain strong at 34 per cent and Return on Assets (RoAs) at 5.5 per cent

 (Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)