SBI Card share price has surged by 20% in July so far as India’s second largest credit card issuer beats lockdown blues

• SBI Card is back near its IPO price after the recent rally
• The fear of mass defaults by credit card users has come undone — only about a quarter of all customers sought moratorium.
• Macquarie, in its June report, said the stock could hit ₹900 in the next one year.

The SBI Card share price is back near its issue price after a lackluster initial public offering (IPO). In July alone, SBI Card shares have surged by nearly 20%, suggesting that the second largest credit card issuer in India is coming out of the lockdown blues.

The SBI Card share price hit a low of ₹495 in May. However, since then, it has shown an upward trend, surging by more than 50%. Analysts expect a further upside of over 20%, with a target price of ₹900.


SBI Card is scheduled to report its June 2020 quarter earnings later today.


Note: Upside as compared to current price of ₹643.8 as of July 20, 12:30 PM.

Analysts are upbeat about SBI Card

One of the reasons for SBI Card share price plummeting after the IPO was the fear of defaults due to the COVID-19 lockdown.

However, according to data provided by Axis Capital, the damage has been limited.


Source: Axis Capital

According to Axis Capital report dated June 18, a quarter of the customers who availed debt moratorium have repaid their dues to SBI Card. On the corporate side, only two companies have availed moratorium.

Another reason for analysts being bullish on SBI Card is that the Indian credit card market is underpenetrated. According to a Bank of America Securities report, India has the lowest credit card penetration at just 3%.

Credit card spends in India are forecast to cross ₹15 lakh crore (approx. $200 billion) in the next five years. This presents an immense potential to credit card companies to grow in terms of revenue as well as market share.

“We raise FY21/22 earnings per share [forecast] by 16%/9% respectively. Thus, we raise our target price by 18% to ₹900,” brokerage firm Macquarie said in a report.

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