SBI Card rallies 6% in weak market; hits 11-month high on positive outlook

The SBI Card stock rallied 6 per cent to Rs 811.85 and was trading at its highest level since October 2023.

Shares of SBI Card and Payment Services (SBI Card) hit an 11-month high of Rs 811.85 on positive outlook, as they rallied 6 per cent on the BSE in Friday’s intra-day trade amid heavy volumes.

In the past one week, the stock has surged 12 per cent. It is trading at its highest level since October 2023. The stock had hit a 52-week high of Rs 857.90 on September 12, 2023.

At 11:52 AM, SBI Card was trading 5 per cent higher at Rs 806.30, as compared to the 0.95 per cent decline in the BSE Sensex. The average trading volumes on the counter had jumped nearly three-fold. Almost 11 million equity shares have changed hands on the NSE and BSE together.

SBI Card is a non-banking financial company engaged in the business of issuing credit cards to customers. The company is the second-largest player (by CIF or customer information file) in the credit card business with 18.9 million CIF, and market share of 18.6 per cent as of March 31, 2024.

Spend for fiscal 2024 was Rs 3.3 trillion, compared to Rs 2.6 trillion in fiscal 2023 and Rs 1.86 trillion in fiscal 2022, while networth stood at Rs 12,084 crore as on March 31, 2024.

According to SBI Card, the growth trajectory of the Indian credit card industry remained healthy, driven by the largely untapped consumer market. The company expects retail spends and NEA to grow in tandem at around 23 per cent to 25 per cent in financial year 2024-25 (FY25).

Several macroeconomic factors have contributed to the growth of India's digital finance sector in recent years, driven primarily by innovations from both established and emerging players, as well as support from governmental and regulatory bodies aimed at promoting a robust digital payments ecosystem.

The proliferation of internet and smartphone usage has further expedited the evolution and adoption of digital payments. Moreover, the increasing digitalisation across key sectors such as mobility, e-commerce, and food delivery has boosted the use of digital payment methods.

The government's interim Union Budget for FY 2024-25 is in perfect alignment with the vision of a technologically advanced and innovative India, allocating a substantial Rs 1 trillion corpus for technology financing, SBI Card said in its FY24 annual report.

The Reserve Bank of India’s (RBI) approval enables RuPay Credit cards at unified payments interface (UPI) merchants and facilitates transactions via QR codes for merchants without POS machines, boosting credit card spending growth.

Overall digital payments have grown by 20 per cent compound annual growth rate (CAGR) in the past three years; UPI accounted for 70 per cent growth during the same period.

The Indian e-commerce market is estimated to reach around Rs 13.6 lakh crore by 2026 from Rs 5.58 lakh crore in 2021. By 2030, it is expected to reach around Rs 25 lakh crore, according to IBEF's report released in March 2024. The new avenues for credit card payments are emerging such as categories like school fees, income tax payments, GST payments and new utility use cases, the company said.

Meanwhile, technical analysts at Prabhudas Lilladher have a ‘Buy’ rating on SBI Card with a target price of Rs 820 per share.

SBI Card has consolidated at a range of Rs 682-Rs 752 levels after a correction, and has taken support at around Rs 670 multiple times.

The stock has given a positive candle above 200 DMA level, indicating positive bias with volume activity, and with the RSI indicator suggesting a positive trend reversal to signal a buy. "We recommend a buy in this stock for an upside target of Rs 820, keeping a stop loss of Rs 700," analysts said.

According to a CNBC TV18 report, Goldman Sachs has upgraded SBI Card from 'Sell' to 'Buy,' raising its target price from Rs 652 to Rs 913.

The investment bank highlighted several factors contributing to this positive outlook, including improved visibility in profitability and operational metrics.