SBI Cards IPO to open on March 2

SBI Cards is the second-largest credit card issuer in India, having a market share of 18.1% in terms of the number of credit cards outstanding as of November 30, 2019. The firm was incorporated on May 15, 1998. It is engaged in the business of issuing credit cards to consumers in India. It is incorporated as a joint venture between State Bank of India and GE Capital Mauritius Overseas Investment.

The company has a diversified revenue model whereby it generates both non-interest income as well as interest income on its credit card receivables. The share of revenue from operations that the company derives from non-interest income has steadily increased over the past three fiscal years, from 43.6 per cent in FY17 to 48.9 per cent in FY19, YES Securities said in a report. The company’s total income increased from Rs 34,71 crore in FY17 to Rs 7,286.80 crore in FY19 at a CAGR of 44.9 per cent and its revenues from operations increased from Rs 3,346.20 crore in FY17 to Rs 6,999.10 crore in FY19 at a CAGR of 44.6 per cent. Net profit increased from Rs 372.90 crore in FY17 to Rs 862.7 crore in FY19 at a CAGR of 52.1 per cent. According to a Crisil report, the company is a leading player in open market customer acquisition in India. It had a presence in 3,190 open market points of sale across the country as of 9M FY20.

>> Second largest credit card issuer in India with deep industry expertise and a demonstrated track record of growth and profitability.
>> Diversified customer acquisition capabilities.
>> Support of a strong brand and pre-eminent promoter.
>> Diversified portfolio of credit card offerings.
>> Advanced risk management and data analytics capabilities.
>> Modern and scalable technology infrastructure.
>> Highly experienced and professional management team.

The company derives substantial benefits from its existing relationship with its promoter, and a loss or reduction in the level of support it receives from its promoter could adversely affect the company. In FY19, new accounts acquired from its promoter’s customer base accounted for 55.2% of the company’s total new accounts. The promoter has extended working capital loans and non-convertible debentures to the company.

The company is involved in an appeal against an order given by National Consumer Disputes Resolution Redressal Commission regarding charging interest rate in excess of 30% per annum from credit cardholders. If the Supreme Court of India upholds the order of the National Commission, this may adversely impact the company and all credit card issuing companies by capping the interest rate charged from credit card holders, thereby having a negative impact on the revenue lines of the company.

Issue Size: Rs 10,350 crore
Offer for sale: Rs 9,850 crore
Fresh Issue: Rs 500 crore
Post-issue m-cap: Rs 70,900 crore
Book-running lead managers: Kotak Bank, Axis Bank, BofA, HSBC
Listing: NSE, BSE
IPO Price: Rs 750-755
IPO Dates: March 2-5