The credit card business will continue to flourish. SBI Cards and Payments Services will benefit the biggest from the growth of this business. This is the reason why SBI Cards remains the choice of many brokerage firms.
Of course, the trend of people towards new age digital payment modes has increased, but the credit card business will continue to flourish. The brokerage estimates that it will run at a rate of over 20 per cent. SBI Cards and Payments Services will benefit the biggest from the growth of this business.
This is the reason why SBI Cards remains the choice of many brokerage firms. Different brokerage houses are predicting this to grow up to 58%. On Thursday, the stock of SBI Cards closed at 856.85 with a rise of 0.32% as compared to yesterday. Although the stock made a high of Rs 1165 on 1 September 2021. So let’s know what different brokerage firms say about it-
Top Choice by Edelweiss Broking
The brokerage has started coverage on SBI Cards and is targeting a rise of 58 per cent with a target of Rs 1,350. This is the only opportunity to invest in Unsecured Consumer Credit and Payments Business. The firm believes that the growth of this company is sustainable, which will continue and its returns are also good.
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This firm has said that they see its EPS (Earnings Per Share) 38 times by FY24. Its target price should be kept at Rs 1,221. The firm has estimated it to grow up to 43% by giving it a buy rating.
The brokerage has said that excluding Jan Dhan, inactive accounts, SBI has 430-450 million customers. Out of this, 200 million people are eligible for the card, while only 6 million cards have been issued. So there is a huge potential here.
As the transactions are increasing, the net interest margin of the company is also decreasing. Along with this, the company is also focusing on Flexi-pay (EMI loans). 45 per cent of the income comes from interest only. Apart from this, income from sources like fee-income has also seen an increase.
Haitong Securities
This brokerage firm has given a target of Rs 1,000 while giving outperform rating to SBI Cards. The firm has said that they are able to see its value quite well from the DCF method of this company.
DCF stands for Discounted Cash Flow. The brokerage said- We believe that this credit card business is half transactions and half lending business. Hence it can give higher ROE (Return on Equity).
