SBI Cards and Payment Services Gets Target Price Upgrade to Rs 870 by Anand Rathi

SBI Cards and Payment Services Sees Strong Growth, Maintains BUY Rating

SBI Cards and Payment Services' (SBICARD) spending growth accelerated in Q4FY26, increasing by 31% year-over-year (y/y) and 1% quarter-over-quarter (q/q). Despite muted gross receivables growth of 2% y/y, the company's net profit showed significant improvement, growing by 13% y/y and 9% q/q. This growth can be attributed to a substantial reduction in credit cost.

Our research report suggests that, assuming lower receivables growth and spread, we have trimmed our net income estimates for SBICARD by 7.6% for FY27 and 9.3% for FY28e. The company's ability to control asset quality and credit cost has led to a gradual improvement in cards and spends, which we believe can drive a re-rating.

Maintaining BUY Rating

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We maintain a BUY rating on SBICARD with a target price (TP) of Rs870. This valuation is based on a price-to-book value (PBV) of 3.8x for FY28e, down from 4.2x in September 2027e. Our forecast for SBI Cards and Payment Services suggests an expected return on assets (RoA) of 4.6% in FY28.