SBI Cards Q3 Results Review - Asset Quality Continues To Disappoint; NIMs Stable: Motilal Oswal

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..Motilal Oswal Report.SBI Cards and Payment Services Ltd. reported another muted quarter as profit after tax missed our estimate by 8% due to high provisions (14% higher than our estimate). PAT declined 9% QoQ to Rs 5.49 billion in Q3 FY24. Net interest income grew 7% QoQ (largely inline). Margin was flat QoQ at 11.3% as an increase in yields was largely offset by an increase in cost of fund. The share of revolver further moderated, while EMI mix was stable. Spending growth was healthy at 41% YoY/22% QoQ, with retail spending up 35% YoY and corporate spending up 64% YoY. Asset quality remained under pressure, with gross/net non-performing asset ratios increasing 21 basis points/7 bp QoQ to 2.64%/0.96%. Return on asset/return on equity too moderated to 4.1%/19.2%. Further, the increase in risk weights impacted capital adequacy ratio by ~400 bp to 18.4%.We further cut our FY24E/FY25E earnings per share by 2%/3%, factoring in higher credit costs. While we expect SBI Cards to deliver healthy earnings compound annual growth rate over FY24-26 however the disappointing earnings run-rate over past several quarters which has driven consistent cut in our estimates along with limited near term earnings visibility keeps us watchful. We downgrade our rating to 'Neutral' with a revised target price of Rs 850 (premised on 21 times September-25E EPS).Click on the attachment to read the full report:.SBI Card Q3 Results: Profit Rises 7.8% But Misses Estimates.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.

SBI Cards Q3 Results Review - Asset Quality Continues To Disappoint; NIMs Stable: Motilal Oswal

Spending growth remains healthy

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