Nuvama Institutional Equities has downgraded SBI Cards to hold from buy, with a revised target price of ₹1,025 per share. The brokerage said that while Q2FY26 showed strong growth in retail spends and receivables — up 9% and 6% quarter-on-quarter, respectively — the stock already prices in much of the optimism.
Nuvama said net interest margin (NIM), fee income, operating costs, and credit costs all missed consensus estimates. Despite a 51 basis-point year-on-year decline in the cost of funds, NIM remained flat sequentially due to a higher proportion of transactor customers, part of whom are expected to convert to interest-earning assets in Q3.
Credit costs contracted 4% quarter-on-quarter to 9% but were still about 5% above estimates. Return on assets (ROA) declined 75 basis points sequentially and 4 basis points year-on-year to 2.6%. Management guided that credit costs would fall below 9% in FY26, but Nuvama noted that valuations at 40x/27x FY26E/FY27E earnings leave little room for further upside.
Disclaimer: The views and recommendations above are those of Nuvama. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
