SBI Cards shares jump 4% intraday as credit card spend hits fresh high in May; brokerages see up to 51 upside

SBI Cards and Payment Services shares jumped over 4 per cent intraday to touch a day’s level of Rs 790.75 per share on the BSE intraday trade on Monday as the credit card (CC) spend in May surged. The stock closed nearly 1 per cent higher to Rs 767 per share on the BSE

Credit card spends grew 8 per cent month-on-month (MoM) to Rs 1.14 trillion in May 2022 and the same grew a strong 118 per cent year-on-year (YoY), up over 23 per cent on a three-year CAGR basis. 

Spends remained strong and continued their healthy momentum over May, led by the rising share of e-commerce transactions, which will keep growth in spends buoyant. Players such as SBI Cards will continue their strong performance, Motilal Oswal said in its report. 

While JP Morgan stated that Industry spends hit an all-time high; net issuance strong at 1.7 million, while all major card players saw an increase in spends MoM, led by SBI Cards. 

The linking of credit cards to UPI could help translate these transactions to credit card transactions, thus boosting industry spends over the long term, as the RBI has proposed the roll-out to start with RuPay cards and then for the rest of the cards, Axis Securities said in its report.  

The brokerage continues to believe that strong tailwinds will drive growth for the credit card industry over the long term and picked SBI Cards along with ICICI Bank as best bet in the segment.  

Another brokerage firm Kotak Institutional Equities maintained a Buy rating on SBI Cards with a target price of Rs 1150 per share, which implies an upside of 51 per cent. 

Similarly, Morgan Stanley gives an Overweight rating on SBI Cards, and said daily spending data from RBI suggests strength in spending sustained into June. It sets a target price of Rs 1100 per share, which implies an upside of around 48 per cent.