SBI Cards Stock Has Dropped 16% in March, Time to Buy?

By Aditya Raghunath — March has been a tough month for SBI (NS:) Cards and Payment Services Ltd (NS:). The company’s share price has fallen almost 16% from Rs 1,108 on March 2 to Rs 932 today. Experts say this could be the consolidation phase for the stock as it moved straight from Rs 636 on June 30 to Rs 1,108 on March 2.

Brokerage firms are bullish on the stock. ICICI Securities has assigned a ‘buy’ on the stock with a price target of Rs 1,100. SBI Cards is the second-largest credit card player in India with a 19% market share.

The firm said, “SBI Cards is set to forge ahead on a healthy growth trajectory as we believe under penetrated market (three cards/100 population), potential within the group (existing-to-bank customers at 49%) and increasing digital transactions (73% CAGR in FY15- 20) would lever growth. Industry spends have grown at 29% CAGR in FY13- 20, FY21E being an exception due to pandemic. Industry growth, in terms of spends, is set to be 20%+, going ahead, with SBI Cards in a comfortable position to benefit and gain market share as well.”

Motilal Oswal Financial Services Ltd (NS:) is also positive on the stock with a price target of Rs 1,200, a possible upside of almost 29% from its current levels. It says the stock “…is trading at 35x FY23E earnings, which is attractive given its strong fundamentals, earnings growth, and long-term structural story.”

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