Target: ₹750
CMP: ₹717.55
We interacted with Girish Budhiraja, Chief Sales & Marketing Officer; Rashmi Mohanty, Chief Financial Officer; Shantanu Srivastava, Chief Risk Officer; and Lokesh Pareek, Head IR, to discuss the outlook of the credit card industry and the key business metrics of SBI Cards & Payment Services.
Key insights are: Retail spending to grow at steady 20-22 per cent – O/S cards to grow at 15-16 per cent; Margins nearing bottom – potential turn in rate cycle remains a positive catalyst; Structural shift toward digital transactions with flywheel effect from RuPay Card expansion; Sourcing mix to tilt back with banca channel at 50-55 per cent; Opex to increase as corporate activity and card sourcing rate pick up; and Asset quality stress lingers; credit costs to remain elevated in the near term.
SBI Card is well-positioned to capture growth in India’s expanding credit card market, which is driven by rising consumer spending, digital adoption, and new business opportunities such as credit on UPI. Notwithstanding near-term headwinds, we expect earnings to gain traction from FY26, supported by expansions in margins, asset quality, and continued growth in spends.
Thus, we estimate earnings growth to recover to about 30 per cent CAGR over FY25-27, even as we estimate a 15 per cent y-o-y decline in earnings in FY25. We maintain a Neutral rating with a TP of ₹750.
