CLSA has retained an ‘Underperform’ rating on SBI Cards, with a target price of ₹800, noting that while Q4FY25 showed progress in asset quality, it came at the cost of growth. The company reported PPOP in line with expectations, but missed CLSA’s PAT estimate by 4% due to still-elevated credit costs.
Net profit for the quarter stood at ₹534.2 crore, up 39.4% sequentially but down 19.35% YoY. NII improved 7% YoY to ₹3,878.7 crore, with NIM expanding to 11.2%, reflecting improved interest spreads. However, annualised credit costs, while down to 9% from a peak of 9.4% in Q3FY25, still remain 200–300bps above historical run-rate levels.
CLSA noted that management expects further improvement in credit metrics in coming quarters but has avoided giving a specific guidance given macro uncertainty. The revolver rate was unchanged at 24%, consistent with past trends.
The larger concern, according to CLSA, is that loan growth has materially slowed — down from 25% in FY24 to just 10% in FY25, as the company prioritized asset quality correction over growth. With muted growth and no clear visibility on normalized credit costs, CLSA remains conservative on the stock despite the near-term improvement in metrics.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please consult a certified financial advisor before making investment decisions.
