SBI Cards - Spends Outlook Steady; Asset Quality Pain To Continue In The Near Term: Motilal Oswal

Motilal Oswal Report

SBI Cards and Payment Services Ltd. is the second-largest player in the card industry with an 18.5% share in CIF and a 15.7% share in total industry spends. However, the market share in spends has declined over the recent period, mainly due to the moderation in corporate spends, while growth in retail spends has remained healthy.

SBI Cards is well-positioned to capture growth in India’s expanding credit card market, driven by rising consumer spending, digital adoption, and new business opportunities such as credit on UPI.

Notwithstanding near-term headwinds, we expect earnings to gain traction from FY26, supported by expansions in margins, asset quality, and continued growth in spends. We, thus, estimate earnings growth to recover to ~30% CAGR over FY25-27, even as we estimate 15% YoY decline in earnings in FY25.

We, thus, estimate RoA/RoE to recover to 4.1%/19.7% by FY27. We maintain a Neutral rating with a target price of Rs 750 (premised on a 22 times Sep’26E earnings per share).

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