Brokerages have recently upgraded SBI Card to a ‘Buy’ rating, citing improvements in asset quality, stabilizing credit costs, and potential benefits from policy rate cuts. Below is a detailed summary of their ratings, target prices, and expected percentage upside based on the current market price (CMP) of ₹723.20:
| Brokerage | Rating | Target Price (₹) | Expected % Upside |
|---|---|---|---|
| Nomura | Buy | 825 | +14.1% |
| Nuvama | Buy | 850 | +17.6% |
Key Insights
- Nomura: Upgraded SBI Card to ‘Buy’ and raised the target price to ₹825 from ₹625, highlighting:
- Key asset quality concerns diminishing in the near term.
- Rising contribution of metro regions to credit card debt and new sourcing.
- Net card additions in November 2024 were the highest since December 2023.
- Asset quality issues expected to stabilize in the coming quarters, with credit costs projected to decline from 9.1% in FY25 to 7% by FY27.
- SBI Card is seen as a major beneficiary of potential RBI rate cuts in FY26.
- Nuvama: Upgraded SBI Card to ‘Buy’ and increased the target price to ₹850 from ₹620, citing:
- Stabilization in credit costs, which likely peaked in Q2FY25 and are expected to improve from Q4FY25 onward.
- SBI Card’s earlier credit cycle weakness compared to peers indicates earlier recovery.
- Anticipated rate cuts by the RBI over the coming quarters would provide additional tailwinds.
Summary
Both brokerages forecast robust growth for SBI Card, with expected upsides of 14.1% and 17.6%, respectively. The company is poised to benefit from improving credit metrics, favorable macroeconomic conditions, and a strong market position.
Disclaimer: The above analysis is based on inputs provided and is for informational purposes only. It does not constitute financial advice. Readers are advised to consult their financial advisors before making any investment decisions.
