Macquarie has upgraded SBI Cards to ‘Outperform’ and raised the target price to ₹1,000 per share, implying a 22.3% upside potential from the current market price of ₹817.95.
The brokerage’s channel checks indicate that credit card slippages are plateauing, and it expects credit costs to decline materially over the next two quarters, supporting profitability.
Other key positive catalysts for SBI Cards include:
- Falling interest rates and easing liquidity, which should improve overall lending conditions.
- Potential tax cuts, which could boost consumer spending and credit card usage.
- The RBI’s softer stance on unsecured loans, reducing regulatory concerns for the sector.
Despite cutting earnings estimates by 13-15% for FY25-27 due to slower loan growth, lower net interest income (NII), and subdued fee income, Macquarie has also reduced its sustainable credit cost estimates, leading to an increase in sustainable return on assets (RoA) by 30 basis points to 4.5%.
With credit risks stabilizing and multiple tailwinds supporting future growth, Macquarie sees strong upside potential in SBI Cards.
Disclaimer: The above article is for informational purposes only and does not constitute financial advice. Investors are advised to consult their financial advisors before making any investment decisions.