With stellar returns, SBI Cards a good bet despite premium valuation

SBI Cards has an 18 per cent market share in terms of outstanding number of cards, as of November 2019

Following robust returns provided by SBI Life Insurance within three years of listing, the market is quite positive on SBI Cards and Payment Services (SBI Cards). Strong fundamentals, coupled with a healthy growth potential and an attractive return profile, makes the IPO — opening on March 2 — a good bet despite its premium valuation.

At 45-46x price-to-earnings and 15x price-to-book value (based on annualised numbers of April-December 2019), the valuation is way higher than global credit card peersand at a premium to domestic well-established lenders.

Rohan Mandora, vice-president at Equirus Securities, says: “SBI Cards’ unique business model, strong growth visibility and