Shares of SBI Cards and Payment Services tumbled 6.1% in intraday trade on Monday, July 28, hitting a 15-week low of ₹834.75 apiece, after multiple brokerages cut their price targets following the release of its June quarter results, which missed Street expectations due to higher write-offs.
SBI Cards, majority-owned by the country’s largest lender, State Bank of India, reported a 6% decline in net profit to ₹556 crore for the April–June quarter of the current fiscal year, compared to ₹594 crore in the same period last year. This marks the fourth consecutive quarter of profit decline as the company continues to grapple with elevated delinquencies.
Total revenue increased 12% year-on-year to ₹5,035 crore in Q1 FY26, up from ₹4,483 crore in Q1 FY25. Impairment losses and bad debt expenses rose 23% YoY, reaching ₹1,352 crore compared to ₹1,101 crore in the year-ago period.
The country’s lenders are facing rising bad loans, particularly in microfinance, credit cards, and personal loans. Analysts have attributed this trend to over-leveraging and a rise in loans outstanding per borrower. SBI Cards’ gross non-performing asset (NPA) ratio improved slightly to 3.07% from 3.08% in the previous quarter but was marginally higher than 3.06% a year earlier. Overall spending by cardholders rose 21% to ₹932.44 billion, while cards-in-force, or the total number of credit cards issued, increased 10% year-on-year.
Brokerage actions post Q1 results
Global brokerage houses, including HSBC and Bernstein, trimmed their target prices for SBI Cards, while Morgan Stanley issued a double downgrade. Bernstein has an “underperform” rating on the stock with a price target of ₹690, noting that elevated credit costs have become one of SBI Cards’ most consistent metrics.
Macquarie remains “neutral” on the stock with a price target of ₹1,040, stating that a decline in funding costs could provide some margin cushion for the current financial year. The brokerage also considers SBI Cards’ valuation of 4.3x FY27 price-to-book to be “inexpensive” for a Return on Asset (RoA) trajectory of 3.5% and sub-par growth. Morgan Stanley downgraded SBI Cards to “underweight” and cut its price target to ₹710.
The company is a non-banking financial company that offers an extensive credit card portfolio to individual cardholders and corporate clients, which includes lifestyle, rewards, travel & fuel, and banking partnership cards, along with corporate cards covering all major cardholders’ segments in terms of income profile and lifestyle.
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