SBI Card share price falls over 3% after Nomura downgrades rating, cuts target price

Shares of SBI Cards & Payment Services fell over 3% in the opening trade on Monday after the global brokerage Nomura downgraded the stock and slashed its target price. The stock declined as much as 3.16% to open at ₹830.10 apiece on the BSE.

Nomura downgraded SBI Cards & Payment Services to ‘Reduce’ and cut the target price to ₹700 per share from ₹1,030 earlier. The target price is more than 15% lower than the Monday’s low price.

The brokerage house expected SBI Card’s profitability to remain under pressure. 

The credit card industry growth is moderating and SBI Cards continues to lose market share, Nomura said.

Moreover, it believes that industry landscape is changing with an increase in riskier consumer segments, while the benefit of policy rate pause/cut on cost of funds will accrue only in FY25.

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Nomura also believes that SBI Card’s stretched valuation leaves no margin for error.

SBI Cards and Payment Services' net profit during the quarter ended March 2023 rose 2.7% to ₹596.5 crore from ₹581 crore in the corresponding quarter last fiscal.

The revenue from the operations rose by 32% at ₹3,762.2 crore in Q4FY23 from ₹2,850.3 crore in the year ago period.

The interest income during the quarter increased by 32% to ₹1,672 crore from ₹1,266 core, while, the fees and commission income increased by 25% to 1,786 crore from ₹1,427 crore, YoY.

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The shares of SBI Cards & Payment Services have gained over 10% in one year. It hit a 52-week low of ₹690.90 apiece on January 30, 2023, and a 52-week high of ₹1,028.75 apiece on August 17, 2022.

At 10:15 am, the shares of SBI Cards & Payment Services were trading 2.11% lower at ₹839.20 apiece on the BSE.

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