Shares of SBI Cards and Payment Services Ltd rose 5% in early deals today after two brokerages Nuvama and Nomura upgraded the stock to 'buy'. Nomura upgraded its stance to Buy on SBI's arm and raised its target price to 825 per share from Rs 625 per share. The Japanese brokerage said it expects major concerns going away in the near-term, specifically on asset quality side. Share of metro regions in credit card debt has been rising since FY23, Nomura said adding that the share Of top 8 metro cities in new sourcing has been rising.
The firm has reported a rise in net card addition in Nov’24, which is highest since December 2023. Asset quality issues should stabilise in next few quarters. The brokerage expects credit cost to be 9.1% in FY25 before falling to 7.5%/7% in FY26/27.
Nomura also said the firm is likely to be the biggest beneficiary of any potential policy rate cut In FY26.
Domestic brokerage Nuvama too upgraded the stock to buy and raised its target to Rs 850 per share from Rs 620 per share. Credit cost shall start improving in Q4FY25. The brokerage expects SBI Cards' credit cost trajectory to improve as its weak credit cycle is set in earlier than peers. Potential rate cuts by the RBI over coming quarters shall be an added positive, said Nuvama.
SBI Cards stock rose 5.12% to Rs 760.15 on Monday against the previous close of Rs 723.10 on BSE. SBI Cards shares are trading higher than 5-day, 10 day, 20-day, 30 day, 50-day, 100-day and 200-day moving averages.
The stock is down 3.56 per cent in a year and fallen 3.83 per cent in two years. Total 0.76 lakh shares of the firm changed hands amounting to a turnover of Rs 5.70 crore on BSE. Market cap of the firm rose to Rs 70,780 crore.