Buy SBI Card, target price Rs 1205: ICICI Securities

ICICI Securities has buy call on SBI Card with a target price of Rs 1205. The current market price of SBI Cards and Payment Services Ltd. is Rs 943.05.

SBI Cards and Payment Services Ltd., incorporated in the year 1998, is a Small Cap company (having a market cap of Rs 91578.96 Crore) operating in Financial Services sector.

Financials
For the quarter ended 31-12-2020, the company reported a Standalone Total Income of Rs 2539.77 Crore, up 1.08 % from last quarter Total Income of Rs 2512.73 Crore and down -.91 % from last year same quarter Total Income of Rs 2563.21 Crore. Company reported net profit after tax of Rs 209.66 Crore in latest quarter.


Investment Rationale
With high growth, entry barriers and near oligopoly, the brokerage remains constructive on the Indian credit card business opportunity, and SBI Cards (SBIC) is one of the best placed pure play operators in this space. Rising digitisation, affluence and increasing consumer credit penetration provide sound business triggers. Already existing business and distribution share (SBIC has ~20% share of cards/spend/ POS) provide strong business moats. Initiate coverage on the stock with BUY rating and target price of Rs1,205 based on 40x FY23E of EPS of Rs30.1.

Promoter/FII Holdings
Promoters held 69.4 per cent stake in the company as of Dec 30, 2020, while FIIs held 6.2 per cent, DIIs 3.5 per cent and public and others 20.9 per cent.