'Buy' SBI Cards Shares Maintains Axis Securities Post Q2 Results, Hikes Target Price — Here's Why

SBI Cards' asset quality concerns and elevated credit costs have been weighing on profitability. However, the management’s confidence in credit costs finally turning the corner and gliding below 9% in H2 is encouraging..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report.We have revised our SBI Cards and Payment Services Ltd.'s net interest income estimates marginally downwards by 1–2% over FY26–27E, factoring in steady margins versus our earlier expectations of improvement, given the headwinds on IEA within the receivables mix. Similarly, higher operating expenses are expected to offset the positive impact of improving credit costs. Consequently, we have reduced our earnings estimates by 15% and 9% for FY26E and FY27E, respectively. We broadly maintain our FY28E estimates with minor tweaks. We believe that improving credit costs will remain the key lever driving RoA improvement. We expect SBI Cards to deliver RoA/RoE of 4.5– 5.4%/20–23% over FY27–28E, marking a significant improvement from 3.2%/15.1% in FY26E. .Valuation & Recommendation: We maintain our Buy recommendation with a target price of Rs 1,035/share, implying an upside of 11% from the current market price. We value SBI Cards at 29x FY27E EPS (vs current valuations of 26x FY27E EPS). .Key Risks to Our Estimates and target priceThe key risk to our estimates remains a slowdown in overall spending, and new customer sourcing momentum would impact the revenue generation capability of the company. Another key risk area for SBIC is an unfavourable receivable mix with a skew towards non-interest-yielding loans (transactors), which will continue to keep margins under pressure.Continued asset quality headwinds, resulting in elevated credit costs, could potentially derail our earnings estimates..Click on the attachment to read the full report:.Laurus Labs Q2 Review: Healthy Momentum In CDMO, FDF; Earnings Upcycle Intact — Motilal Oswal Maintains 'Buy'.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

'Buy' SBI Cards Shares Maintains Axis Securities Post Q2 Results, Hikes Target Price — Here's Why

With cost of fund expected to remain steady at current levels, the brokerage anticipates NIMs to stay within a narrow range of 11.2–11.4% over FY26–28E.

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