SBI Card IPO: State Bank of India chief makes this big announcement; all that you should know

SBI Card IPO: The State Bank of India (SBI) subsidiary company SBI Card IPO (Initial Public Offer) is going to hit Indian bourses in the current quarter (Q4FY20), SBI Chairman Rajnish Kumar has made an announcement in this regard. The SBI chairman has said that the SBI Card IPO is most likely to become available for subscription in the current quarter means January to March 2020 (Q4FY20). SBI Cards IPO is one of the two IPOs that SBI is coming within the year 2020. Other SBI IPO that is coming this year is UTI AMC. The SBI Card has already submitted its applications with the SEBI (Securities and Exchange Board of India). After the submission of the application, the market is rife with SBI Card IPO date and SBI Card IPO price. However, there is no such official announcement being made either by SBI or by SBI Card. So, even though there is no such official announcement being made by SBI in regard to the SBI Card IPO worth as well, market experts are of the opinion that SBI Card IPO will be Rs 9,500 crore worth.

Stock market experts are of the opinion that strong fundamentals and network of the SBI and its cards and payment services spread, the SBI Card IPO is expected to perform well at the NSE and BSE.  SBI Card has moved to the second position in India with a market share of 18 per cent and it has the potential to scale up further, riding the Indian consumers’ increasing predilection for credit cards and higher penetration in its captive Banca customers. SBI Card has 18 per cent market share, which is second in the Indian market after the HDFC Cards that holds 27 per cent of the net Indian market.

See Zee Business Live TV streaming below:

On SBI Card IPO fundamentals and its current status Anand Dama, Research Analyst at Emkay Global said, "SBI Card is likely to be valued at around Rs 600bn in the IPO, implying premium valuations post-money (PE of 41x based on H1FY20 annualized EPS) against its developed or developing economy peers that are trading around 9-18x PE. For SBI bank, the SBI Card IPO at this valuation would imply a value of Rs 417bn/Rs37 per share (post discount), which is higher than our and Street’s estimate, adding around Rs 15 to our target price for SBI (Rs 350)."

However, apart from the strategy that an investor should adopt when the SBI Card IPO becomes available for subscription, there are some more details that an investor should know, especially how does the SBI's brand name is going to support the SBI Card IPO and its investors.

Speaking on the SBI impact on SBI Card IPO success Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal said, "SBI currently holds (along with its nominees) 689,927,363 Equity Shares, constituting to 74 per cent of the pre-Offer issued, subscribed and paid-up Equity Share capital of the Company." Taparia said that as a subsidiary of SBI, the company has access to SBI's extensive network of 22,007 branches across India. The partnership enables it to market its cards to a huge customer base of 436.4 million customers.

Once it becomes available for subscription, the SBI Card IPO will be listed at both NSE and BSE. The face value of the SBI Card IPO would be Rs 10 per equity shares. Offer for sale is 130,526,798 Equity Shares of Rs 10.

Stock market investors who hold SBI shares on the cut-off date would be eligible to apply under the shareholder's category of SBI Card IPO. As per the SEBI norms, the maximum limit defined for the 'retail individual shareholders to apply in shareholder category is Rs 2 lakhs. SBI shareholders (bidding up to Rs 2 lakhs) can also apply under the retail category. Further, if an SBI shareholder is also an SBI employee, he or she is also eligible to apply in all the three categories — RII (up to Rs 2 lakhs), Shareholder (up to Rs 2 lakhs) and Employees (up to Rs 5 lakhs).