Should you buy, sell or hold on to SBI Card shares? What top brokerages suggest

SBI Cards and Payments Services — the issuer of credit cards under brand SBI Card — continued to face selling pressure for a second back-to-back session on Dalal Street on Wednesday, after the company reported a set of financial results that fell short of Street estimates. 

During market hours on Tuesday, SBI Card reported a 32 per cent jump in net profit to Rs 509 crore for the October-December 2022 period and revenue growth of 16 per cent to Rs 3,656 crore compared with the corresponding period a year ago. Growth in interest income, and income from fees and services boosted SBI Card's total revenue in the three-month period, according to a company statement. 

According to Zee Business research, SBI Card was estimated to report a quarterly net profit of Rs 595 crore.

The company's margin — a key measure of a business's profitability — shrank by 129 basis points to 13.93 per cent, according to SBI Card.

Here's what brokerages make of SBI Card shares after the credit card issuer's earnings announcement:

CLSA upgraded SBI Card to 'reduce' from 'sell' but reduced its target price for the stock by Rs 35 to Rs 750. The company's quarterly net profit missed the brokerage's estimates by a 2-5 per cent shortfall across major parameters.

The company's net interest margin hit a multi-quarter low despite a stable share of revolvers, CLSA pointed out. In credit card parlance, a revolver is the balance a borrowers can carry forward to the next month by paying additional interest.

Morgan Stanley retained an 'overweight' rating on the SBI Card stock but brought down its target price by Rs 75 or 7.5 per cent to Rs 925. 

JPMorgan, HSBC and Nomura lowered their targets for SBI Card shares by Rs 60-145.

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