Firstly we also need to understand how most investor value these credit card company as they are much less risk with a great benifit in NPA also due to very high interest rate that make them have higher price to book.
Just for example if we even see many developed market like usa and Europe there we see company like America express pure credit card play and much more slow growth opportunities and traditional a more constant compounding buisness still trades at 5-6 time there book.
This is very common with most pure credit card company to have such high pb ratio so sbi card having 1.8x to 2x of it saturated market pb ratio sound quite interesting to me.
While if we see other gold loan company in more mature and low growth market they tend to hover around 1-3 only so how these will play out is anyone’s guess.
Not all nbfc are same that need to taken in account and how they play out is also a bigger question.
As sbi cards have 2-3 growth driver
- capital consumption increase specially in mid to high income earner over a period of time.
- greater penetration over time that can make there base easily 5-10x very easily.
- New offering and move toward more cheaper loans + offering more cards that can make same customer have more then one card at a time and with more partnership can also open other income sources.