Shares of SBI Cards and Payment Services Ltd declined sharply on Monday, falling over 6% in early trade to ₹855.65, as investors reacted to the company’s June quarter results and subsequent downgrades from leading brokerages. The stock had closed at ₹888.50 in the previous session.
The pressure on the stock stemmed primarily from concerns over rising credit costs. SBI Cards reported a 60 basis point jump in credit costs to 9.6% in Q1 FY26 — the highest level in 16 quarters — raising alarm over asset quality deterioration. This is despite the company’s earlier commentary during the December quarter that credit costs had likely peaked and were expected to moderate going forward.
In response, several brokerages took a more cautious view of the stock. Morgan Stanley downgraded its rating to “Underweight” and reduced its target price to ₹710, citing higher-than-expected stressed asset creation and elevated ECL coverage. Bernstein maintained an “Underperform” rating with a target of ₹690, warning that rising credit costs had become a persistent issue for SBI Cards. HSBC also trimmed its target price. In contrast, Macquarie maintained a “Neutral” view, setting a target of ₹1,040. While it acknowledged the margin support from falling funding costs, it also flagged limited near-term growth momentum.
Despite the recent earnings disappointment, some analysts noted that the valuation at 4.3 times FY27 price-to-book remains undemanding given the company’s long-term return on assets (RoA) profile of 3.5%. However, with mixed ratings across the board and 11 analysts recommending either a “Hold” or “Sell”, sentiment in the near term remains under pressure.
SBI Cards’ Q1 performance has added to investor anxiety over the broader unsecured lending segment, already under regulatory scrutiny. Unless asset quality stabilises in the coming quarters, analysts expect the stock to face continued headwinds despite longer-term structural strengths.
