Axis Securities
SBI Cards (Buy)
Target: ₹1,100
CMP: ₹1,015.5
SBI Cards & Payment Services Ltd has reported a broadly in-line set of numbers. Total spends during the quarter stood at ₹33,260 crore (+74 per cent y-o-y, -7 per cent q-o-q), backed by improved spends in June 2021 as lockdowns across States eased. Cards in Force (CIF) stood at 1.2 crore (+13 per cent y-o-y, +2 per cent q-o-q). Backed by strong operational performance, SBIC saw improvement in its market share (as per May ’21 data) to 19.2 per cent in terms of spends (vs 18.5 per cent in Q4-FY21) and remained flattish at 18.9 per cent in terms of CIF (vs 19 per cent in Q4-FY21). Share of online retail spends continues to improve. On asset quality front, while restructured book (RBI RE 1.0) has seen a part of portfolio being written off (₹640 crore), the lower quantum of restructuring 2.0 and continuous reduction in number of restructuring requests is likely to keep the asset quality benign, going ahead. Key positive takeaways from Q1FY22 result have been lower quantum of restructured book and downward trajectory on restructuring requests in July ’21 vs June ’21 with bounce-back in spends despite Covid 2.0. As spends and customer sourcing pick up, we believe SBIC would be slated for robust growth translating into market share gain.