Business News: SBI Cards trade higher for the fifth day in a row.
Shares of SBI cards and payment services (SBI cards) traded higher for the fifth consecutive day, climbing 4% to Rs 1,076.35 on BSE in intraday trading on Friday. The stock has gained 11% in the past week. By comparison, the S&P BSE Sensex was up 3% during the week. The stock traded at its highest level since March 9, 2021. On February 24, it hit a record high of Rs 1,149.
On March 17, the US private equity firm Carlyle Group had sold 4.3% of the capital (40 million shares) in SBI Cards and Payment Services through block agreements. The shares sold at Rs 986 each, recovering Carlyle Rs 3,944 crore. Following the sale of shares, Carlyle’s stake in SBI Cards fell to 11.61% from 15.86 percent.
Most of these shares were bought by foreign portfolio investors (FPIs), as their stake in SBI Cards increased to 8.62% in the quarter of March 2021 from 5.84 per cent at the end of the December 2020 quarter.
“While management expects Wave 2 to hinder short-term collections, the quality of originations for FY21 has improved thanks to additional credit filters and a higher share of bank procurement, leading to a reduction in the share of revolvers. and the expected general improvement in asset quality.
Management believes the growing share of prepaid payment instruments (PPIs) / wallets is free, and highly competitive from peer card issuers are seasonal and that SBI Cards has maintained its share of cards / spending, ”the brokerage firm said in a statement.
“Going forward, with adequate sourcing (77% + PCR / 6% + ECL), incremental client sourcing from bank channel and the resumption of POS and online spending (52 per cent of the total), both supported by digital channels, should limit the impact of the second wave.
However, management conservatism and the fallout of the second wave impact on H1FY22 push us to reduce NII (20% / 12 compared to previous estimates) and higher provisions (7% / 5% compared to 4% previously ) in FY22-23, “Prabhudas Lilladher analysts said in the March quarter results update.