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Motilal Oswal Report
SBI Card and Payment Services Ltd. reported a robust quarter on key business metrics and its net earnings delivered a strong beat aided by lower provisions.
Profit after tax thus grew 106% YoY to Rs 6.3 billion (our estimate: Rs 5.3 billion).
Margin was stable QoQ at 13.2% in Q1 FY23. Revolver mix increased to 26% from 25% in Q4 FY22. Trends in both retail and corporate spends were strong at 68% YoY and 130% YoY, respectively. Overall spends thus rose 79% YoY.
Gross/net non performing asset ratio stood stable QoQ at 2.24%/0.79% with provision coverage ratio at ~65%. Reserve Bank of India restructuring book declined to Rs 1.5 billion. Q1 FY23 return on asset/return on equity stood robust at 7.0%/30.8%.
We estimate SBI Card to deliver 52% earnings compound annual growth rate over FY22–24, leading to an RoA/RoE of 7.4%/31.4%.
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