SBI Cards IPO Analysis | SWOT | Should you invest?

Everything You Need to Know About SBI Cards IPO

Introduction

In this article we will do SBI Cards IPO Analysis, Key Financials, Shareholding Pattern Pre and Post IPO and SBI Cards SWOT analysis. SBI Cards and Payment Services is India’s second largest credit card issuer.

SBI Cards IPO Analysis

Company Overview

• SBI Cards and Payment Services is India’s second largest credit card issuer after HDFC Credit Card. SBI Cards is having around 18% Market share in Indian Credit Card Market in terms of Number of Credit Card Outstanding as on Sept 30, 2019.
• It is having an extensive Credit Card Portfolio with Individual Cardholders as well as Corporate Clients that bear both the SBI Card brand and our co-brand partners’ brands.
• SBI Card Branded Credit Cards : SimplySave, SimplyClick, Prime & Elite
• Co-branded Credit Cards : It is India’s Largest Co-brand Credit Card Issuer having partnerships with several major players in Travel, Fuel, Fashion, Healthcare & Mobility Industries. For Examples : Air India, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money, Yatra etc.
• SBI Cards has a sales force of 33,086 outsourced sales personnel as of September 30, 2019, operating out of 133 Indian cities. It had a presence in 3,009 open market points of sale across India as of September 30, 2019.
• In addition, its partnership with SBI provides access to State Bank of India’s extensive network of 22,007 branches across India, which enables it to market credit cards to SBI’s vast customer base of 43.6 Crores customers as of March 31, 2019.

Overview of credit Card Industry

• Credit card industry intends to grow 2.5 times in the next five years.
• Credit card spends have registered a robust growth, growing at a CAGR of 32% from FY2015 to FY2019 to reach Rs.6 Lakh Crore as of FY2019.
• And it is expected to grow at a healthy rate to reach Rs 15 lakh crore as of fiscal 2024, which is 2.5 times over fiscal 2019, according to CRISIL Research.

Key Financial Highlights

• As given in the above graphs, Revenue from operations have increased from Rs.3,346 Cr in FY2017 to Rs.6,999 Cr in FY2019 at a CAGR of 44.6%. And for H1 FY20, it is Rs.4,677 Cr.
• While, Net profit increased from Rs.372 Cr in FY2017 to Rs.862 Cr in FY2019 at a CAGR of 52.1%. For H1 FY20, PAT was Rs.725.8 Cr.
• Return on Average Equity (ROE) has remained stable at 28.5% in fiscal 2017 and 28.4% in fiscal 2019. Whereas Return on Average Assets (ROA) increased from 4.0% in fiscal 2017 to 4.8% in fiscal 2019.

SBI Cards IPO Details

• The IPO will open for subscription from March 2-5. The shares will be credited to investors’ demat account on or around March 13.
• Listing : Shares of the company will be listed on BSE and NSE both on or around March 16, according to the red herring prospectus.
• Kotak Mahindra Capital, Axis Capital, BofA Securities, HSBC, Nomura, SBI Capital Markets are the book running lead managers to the issue
• Offer Break-up
  • 50% of the issue has been reserved for QIBs (Qualified Institutional Buyers), 15% for HNIs (High Net Worth Individuals) / NIIs (Non- Institutional Investors) and 35% for Retail Investors.
  • Normally, IPOs are open for subscription for three days but SBI Cards IPO will run for four days. The first three days, i.e. from March 2 to March 4, the issue will be open for all bidders – QIBs, HNIs/ NIIs and Retail investors (including SBI shareholders and employees).
  • However, the fourth day (March 5) will be exclusively for Retail investors only. For QIBs, the offer will close on March 4.

Shareholding Pattern Pre and Post IPO

SBI Cards – SWOT Analysis

Frequently Asked Questions (FAQ)