SBI Card was launched in
October 1998 by the State Bank of India and GE Capital.
Get SBI Cards
and Payment Services Ltd IPO details. Find IPO Date, Price, Live Subscription,
Allotment, Grey Market Premium GMP, Listing Date and Review.
The company was incorporated as SBI Cards and Payment
Services Private Limited, SBI
Card is headquartered in Gurugram, Haryana.
The legal name of SBI Card was changed on
20 August 2019, from SBI Cards and Payment
Services Private Limited to SBI
Cards and Payment Services Limited, on account of its conversion from
a “Private Limited” company to a “Public
Limited” company.
The IPO of SBI Cards will open for subscription
on Monday amid a lot of buzz about the issue. Some analysts expect the issue to
get a bumper response from investors. SBI Cards and Payments
Services Ltd, the credit card subsidiary of the country's largest lender State
Bank of India (SBI),
aims to raise over ₹10,000 crore through this initial public offering. The
issue will close for subscription on March 5. The price range for the IPO has
been fixed at ₹750-755 per share.
Bids can be made for a minimum of 19 equity
shares and in multiples of 19 equity shares thereafter. At the upper end of the
price range, one lot will cost ₹14,345. Link Intime India Private Limited is
the registrar of the IPO and it will manage the allocation.
SBI Cards shares will
get listed on NSE and BSE. According to brokerages, the listing of shares may
happen on 16th March.
About 10% of the issue size or 1.3 crore
shares are reserved for SBI
shareholders. To apply for this category, SBI shareholders should
have had SBI shares
as on February 18, 2020.
18.4 lakh shares also reserved for eligible
employees of SBI and SBI
Cards. An employee discount of ₹75 per equity share will be offered to
eligible employees.
SBI Cards IPO consists
of an offer for sale of about 13 crore shares by SBI and Carlyle Group and
fresh issue of ₹500 crore which will be used for augmenting the capital base. SBI Cards is 74% owned
by SBI while Carlyle Group owns the remaining 26%. SBI will divest 4% of its
stake, while Carlyle is set to sell 10% of its stake.
SBI Cards & Payment
Services (SBIC) is a subsidiary of SBI and the second largest credit card
issuer in India with 18% market share in terms of cards outstanding, with 9.83
million credit cards outstanding as of November 30, 2019 and ₹1,03,200 crore in
total of credit card spends in fiscal 2019.
It also is the largest co-brand credit card
issuer, having partnerships with several major players. It will become the only
listed company in India in this space.
SBI Cards revenue model
includes both non-interest income (primarily comprised of fee-based income such
as interchange fees, late fees and annual fees, among others) as well as
interest income on the receivables when cardholders roll over their dues. The
share of interest income was 52% of the total income in FY19, falling from 56%
in FY17. The share of non-interest income has improved to 48% of the total pie
from 39% in FY17.
Revenues and profit have more than doubled
over the past three years. Net profit rose to ₹862 crore in fiscal 2019 from
₹372 crore in fiscal 2017 while revenues from operations increased to ₹6,999
crore in fiscal 2019 from ₹3,346 crore in fiscal 2017.
Apart from highly competitive credit card
market, SBI Cards
also faces competition from new-age fintech led payment modes including Unified
Payment Interface (UPI) and mobile wallets. Credit card receivable portfolio
falls under the unsecured retail category, thus presenting a greater credit
risk. SBI Cards aims
to keep the proportion of non-performing assets at 2.4%-2.5% of its total
assets, Chief Executive Officer Hardayal Prasad said. Its gross non-performing
assets stood at 2.47% at the end of last year, down from around 2.9% in March
2018.
A slowdown in economic growth can result in
rising NPAs and slower growth as has been witnessed in past. Currently
interchange fees for credit cards or interest rates charged by credit card
companies are not regulated. Any move to regulate these could have an impact.
“Given its dominant position in the credit
card market and strong parentage, SBI Cards is well placed
to benefit from the rising trend of digital payments and e-commerce. At the
upper price band, the offer is valued at 12.6 times FY20 (estimated) book value
(on annualized and fully diluted basis) and 45.8 times estimated FY20 earnings.
Strong growth, stable asset quality and superior return ratios provides comfort
and justifies premium valuation. Further, being the first in the segment to get
listed, it could generate high investor interest," said domestic brokerage
Motilal Oswal, which has recommended “subscribe" to the IPO.
We also recommend subscribe to the issue.
“Although the valuations are a bit on the
higher side, we are positive on the future outlook of the company given
favorable industry scenario, large untapped SBI customers and strong financial
track record," it said.
SBI Cards also has the
strong parentage of SBI, which provides access to its extensive branch network
and is also the first in credit card industry to be listed, which could give it
a premium valuation.
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