HSBC has downgraded SBI Cards and Payment Services to reduce from hold and cut the target price to ₹660, citing persistent pressure on growth and profitability due to the company’s heightened risk aversion.
The brokerage believes SBI Cards’ conservative stance on underwriting is likely to continue weighing on AUM growth and earnings, particularly in a competitive credit card environment where peers are selectively scaling up risk.
HSBC has revised its earnings estimates, raising FY26 EPS by 4.6%, but cutting FY27 and FY28 EPS by 11.9% and 13.6% respectively, reflecting slower growth expectations and margin pressure over the medium term.
Valuation-wise, HSBC now values SBI Cards at 3.5x FY27E book value, which it believes appropriately reflects the subdued growth outlook and elevated caution embedded in the business strategy.
While asset quality remains stable, HSBC sees limited catalysts for a meaningful re-rating in the near term unless growth momentum improves materially.
Disclaimer: The views and recommendations above are those of HSBC. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.