Morgan Stanley has maintained its underweight rating on SBI Cards with a target price of ₹700 per share after the company’s Q2FY26 results came in slightly below expectations. The brokerage said profit after tax missed its estimate by about 6%, mainly due to higher-than-anticipated costs.
Morgan Stanley cautioned that market expectations for credit costs and earnings appear too optimistic given the competitive intensity in unsecured lending and evolving regulatory landscape. The brokerage believes the company faces structural risks to growth and return on equity (ROE) in the medium term, which could lead to a valuation de-rating.
While the firm acknowledged that the core business remains strong with healthy customer additions and steady card spends, it expects earnings to remain under pressure due to margin compression and limited operating leverage. Morgan Stanley remains cautious on SBI Cards, citing rising funding costs and slower fee income growth.
Disclaimer: The views and recommendations above are those of Morgan Stanley. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
