Kotak bullish on SBI Cards’ growth, initiates coverage

Mumbai: Kotak Institutional Equities sees SBI Cards and Payments as a long-term compounding story even as the stock has underperformed the benchmark indices since March is trading at an expensive valuation.

The brokerage has initiated coverage on SBI Cards and Payment Services with an add rating and target price of Rs 900, implying a 7 per cent upside from current levels.

The positives of strong revenue growth led by rising and underpenetrated payments play, highly profitable lending book and benefit of a strong parentage, that can lower the origination risk, are partly offset by expensive valuations, said Kotak Institutional.


The brokerage likes the space as it is one of the few areas where it sees strong growth prospects and it is bullish on SBI Cards given its strong market share.

Shares of SBI Cards and Payment ended up 0.1 per cent at Rs 840.70 on Tuesday. The stock has gained 37 per cent since March 24 — when the benchmark indices hit a bottom after a sharp decline in February-March. The benchmark Sensex has gained around 80 per cent since then.