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Anand Rathi Report
At current market price, SBI Cards and Payment Services Ltd. trades at 3.5/2.9x FY27/28e price-to-book value. Anand Rathi maintain Buy rating on the stock with a target price (based on the residual income model) of Rs 870, valuing it 3.8x FY28e BV.
SBI Cards spends grew by strong 31% YoY and 1% QoQ in Q4 FY26, while gross receivables growth was muted at 2% YoY. Led by significant improvement in credit cost, net profit grew by 13% YoY and 9% QoQ. Assuming lower receivables growth and spread, Anand Rathi has trimmed its net income estimates by 7.6/9.3% for FY27/28e.
With visible control on asset quality and credit cost, a gradual improvement in cards and spends can drive a re-rating.
Key Risks:
- Status quo on MDR fees;
- higher-than-expected credit cost; and
- lower-than-expected receivables growth.
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