SBI Cards & Payment Services received an upgrade to "Buy" from HSBC Global Research. The brokerage firm raised its target price to Rs 1,000 from Rs 560, citing an earnings upgrade cycle driven by improved card issuance and softening money market rates.
HSBC Global Research highlighted several positive factors contributing to the upgrade. SBI Cards has seen a significant improvement in card issuance, which is expected to boost earnings. Additionally, the recent repo rate cut and open market operations have created a favorable rate environment. This is beneficial for SBI Cards, as a large portion of its borrowings mature within a year, leading to potential net interest margin expansion.
"Improvement in card issuance, softening money market rates are positives. Credit cost drop could drive sharp EPS upgrades," the brokerage noted.
Despite an increase in credit costs to 9.4% in the third quarter of FY25, HSBC expects these costs to peak soon. Positive management commentary and tax relief measures from the recent budget are anticipated to improve asset quality and reduce credit costs. HSBC also noted that a 100 basis point drop in credit costs could lead to a 14% upgrade in earnings per share.
The scrip fell as much as 1.01% on Monday. It pared losses to trade 0.55% lower at Rs 854.25 apiece, as of 9:40 a.m. This compares to a 0.66% advance in the NSE Nifty 50 index.
It has risen 13.23% in the last 12 months. Total traded volume so far in the day stood at 0.34 times its 30-day average. The relative strength index was at 60.44.
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