SBI Card's credit card spending market share falls in Nov: Should you buy, hold or sell it?

Shares of SBI Card are set to see traction in Tuesday's trade (December 24, 2024) after global brokerage Morgan Stanley has maintained its previous equal weight rating on the counter. In the previous day's trade, stock of the credit card company ended higher by 0.6 per cent at Rs 691.35 per share on the BSE amid strength in the financials.

The brokerage has set the target for the stock at Rs 650- a potential downside of nearly 6 per cent from the last close.

Morgan Stanley highlighted that the credit card company's major spending market share fell in the previous month to 14.9 per cent month-on-month (MoM) from 15.8 per cent in October. Likewise, the spending on a year-on-year (YoY) basis slumped 20 per cent during the month,  reflecting ongoing impact (starting February) of RBI notification on corporate card spending.

The Reserve Bank of India in March this year tightened rules for debit and credit cards issued for business accounts. The apex bank asked card-issuers to put in place an effective mechanism to monitor end use of funds.

Further the new guideline stipulated that the card-issuers shall not share card data (including transaction data) of the cardholders with the outsourcing partners unless sharing of such data is essential to discharge the functions assigned to the latter. In case of sharing of any data as stated above, explicit consent from the cardholder shall be obtained. It shall also be ensured that the storage and the ownership of card data remains with the card-issuer.

The brokerage also stated that the company's market share in terms of the number of the credit cards in force remained at 18.7 per cent as of November 2024.

Nonetheless, Morgan Stanley pointed out that the company's aggregate daily spending was up 8 per cent YoY so far in December as against 4 per cent in November.

SBI Card share price

The stock has been an underperformer with a negative return of nearly 11 per cent in the past one year. The stock marked its 52-week high price of Rs 817.4 per share on September 13.