SBI Cards share price rises over 5% on strong Q1 earnings

SBI Cards share price rose over 5% in Tuesday's trading session after the subsidiary of SBI announced 14 per cent rise in Q1 net profit at Rs 393 crore compared to Rs 364 crore in the corresponding period last year. Total income fell to Rs 2,196 crore in Q1 compared to Rs 2,304 crore in Q1 FY20.

Share price of SBI Cards gained 5.81% to Rs 795.5 against previous close of Rs 751.80 on BSE.

The stock opened with a gain of 2.81% at Rs 783. SBI Cards share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The large cap stock has risen 27% in one week.

Market firm of the firm rose to Rs 73,708 crore.

SBI Cards CEO resigns, Ashwini Tiwari to take charge in August

"SBI Cards has offered moratorium on credit card dues to eligible borrowers in accordance with board approved policy. The company, based on current estimates, has decided to continue with additional management overlay on expected credit loss (EGL) amounting total Rs 489.25 crore created during the quarter and year ended March 31," SBI Cards said.

Company's income from fees and services stood at Rs 688 crore in Q1 compared to Rs 916 crore in Q1FY20.

Jaikishan Parmar, senior Equity Research Analyst at Angel Broking said, "SBI Cards reported an overall good set of numbers for Q1FY21. When lockdown begun, investors were concerned about asset quality issues. However, SBI cards positively surprised by reporting a very low number of the moratorium. Moratorium % to loan book declined from 29% in Q4FY20 to 6.7% in Q1FY21. Its active credit cards increased by 20% despite the lockdown. NIM rose 260bps QoQ/414bps YoY as SBI card able to reduce the cost of fund and able increase yield on loan book. Total income declined 5% YoY, primarily driven by plunge in other income 82% YoY. Controlled operating expenses helped cost to income ratio to improve by 635 bps to 47.2%. And finally, the lower tax rate of the new regime helped SBI card to report PAT growth of 14% YoY."

Total gross advances (credit card receivables) as of June 30 were Rs 23,330 crore, an increase of 9.9 % from Rs 21,231 crore as of June 30, 2019. The card company's net worth as of June 30, 2020, was Rs 5,722 crore against Rs 5,413 crore as of March 31, 2020, a growth of 5.7 per cent.

SBI Cards IPO, which was held from March 2 to March 5 this year, was subscribed 26.54 times on its last day despite weak market conditions. The IPO which initially attracted lot of investor attention could not deliver listing gains due to crash in global and domestic markets.

SBI Card Q1 results: Net profit rises 14% to Rs 393 crore

Global and domestic markets had started feeling the effect of slowdown due to rising number of coronavirus cases across the world. SBI Cards IPO hit the market when Nifty was down 8% and Sensex had lost over 7% since the beginning of this year.

Meanwhile, Sensex and Nifty were trading higher in afternoon session. Sensex traded 389 points higher at 37,808 and Nifty climbed 114 points to 11,137.