SBI Cards & Payment Services Limited

Have been tracking sbi cards lately I feel credit on UPI will make it very convenient and will make credit cards useful for even small value transactions, I think the revolves book will reduce as there is some customers who are mindful about proper use of credit cards, UPI can make credit cards mainstream but I do not think they will earn on it MDR revenue, I already have two SBI credit cards, I have many other bank’s credit card but I feel SBI card is the best really like their investment in technology, recently with their SBI cashback card they have reduced MCC on which 5% cashback was applicable, also I like SBI’s customer onboarding journey, they have a good process, currently with the devaluation of majority of Axis bank credit cards and reduction of airport lounge access I am seeing players avoiding cash burn, so in all I feel revolver should reduce, credit card new users as well as spending rise, fee income should increase to in proportion, valuation is much more favourable now, India in my opinion should be very high growth also if they are able to maintain GNPA it should be a very good stock in my opinion have taken entry.

Any anti- thesis and risks someone can point.
I am a credit card user of SBI and many other banks can provide any feedback for comparision purposes if required, Happy to help.


Again had a look at the carts, the stock is making lower highs and lower lows which is a very bad trend. It looks like the stock is a stage 4 stock. Will exit all my holdings in this counter tomorrow.

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Any thing fundamentally you find wrong about this stock?


Nope, long term this is a macro story. As per my opinion if you are looking at investing perspective this is a good company to hold in your portfolio. I have exited looking at chart structure. Although i am learning and there is still a lot to learn for me to share a definitive call.
Some good points for the stock:

  • Good brand
  • Good management
  • Credit use is increasing in the market
  • Only point to watch out for is rise in NPA but that would happen if the condition of the economy goes bad. Also, i think their grip is better in Tier 2 and tier 3 cities where folks are not savvy regarding credit use.

But all in all good company to hold for long term as long you keep on tracking their numbers.

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in their recent concall their credit cost increased to 6.8% more than management expected and it was mostly from the cards sourced in 2019, they have guided for credit cost in the range of 5.8-6.2%, also have reduced credit limits which is very rarely done by any bank’s card. I find that as a positive and also I personally hold 2 SBI Credit cards their app is one of the best and is customer centric, it is the only company that allows a credit balance refund to be credited in the bank through the app itself, I also have used their credit on UPI feature which I feel is a gamechanger as people generally use UPI for everything and credit cards are mostly used for big ticket purchases it is very convenient.

Management as guided 1 million new card acquisition this FY and also I am very bullish as I track its monthly spends and also its market share, it is gaining market share, also some BNPL are shutting down due to some regulations and also many new age credit cards such as cards with tie up from SBM bank are losing customers due to funding winter, so cost of acquiring customers and excessive rewards shall be mitigated which is really nice, SBI cards cost of funding has also reached its peak and it shall reduce from FY25 onwards if RBI starts lowering rates.


I believe credit cards is an inherently very sticky business and even foreign banks find it difficult to acquire customers in India as their target audience is mainly tier 1 cities with already good credit scores Is This the End of Credit Card Business in India for Foreign Banks? | TechnoFino - #1 Community Of Credit Card & Banking Experts

I feel companies wont give up easily on cards business as there are many people in rural areas who are very disciplined in paying dues than urban customers. Things have changed now… Rural economy is slowly improving with penetration of both shopping malls and online delivery. India still has lot of people who dont have cards - Ofcourse it comes with certain % downside risk of defaulting payments.


But Since many Qtrs the company is not able to deliver the no.s

Due to Recent RBI announcement regarding Risk adjustment … this stock has gone further down… Looks like it is only a short-term fall. Credit Card penetration/ unsecured loan is so low that someone has to fill the gap. Other businesses such as consumer durables etc are depended on this as well.


True technically in a down trend waiting for it to form a base to add this stock.

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  1. From the presentation I could see that SBI cards gives around 65 percent of the cards to the age above 30 and also around 50 percent tot tier3 and others. Does this data imply that even though credit card in force might be growing but the may get a lesser revenue compared to hdfc cards.
  2. Also I dont find a aggresive marketing from SBI cards compared to HDFC.
  3. Another advantage which I find other banks like HDFC,ICICI have is majority of the people have salary account in these banks, so it might be easy to cross sell compared to SBI.
    (Disc: Not invested , reading about the company).

I have 2 SBI credit cards and they are aggressive in marketing you can find sales agents in malls, airports.

Also SBI has an advantage that I read in its AR is 24% cards are issued to government employees who generally have an account as most goverment accounts are with SBI, and around 24% is salaried,
Its income is impacted by high cost of funds due to increase in repo rate though it manages to source money from its parent SBI its current COF is around 7.2% which could increase upto 8%, customers are being increasingly aware about high Rate of interest and due to various influencers educating on the optimal use of credit cards so the share of customers who revolve is reducing and due to this SBI cards is desperately trying to increase the interest income as recently in online sales too bank discount on Amazon and flipkart which seems to be an industry wide phenomenon as HDFC and other companies also used the same tactic.

So NIM shall contract but the growth in CC and spends is very very strong, with credit on UPI CC will become the most convenient way to pay as I use it daily.


I think they cannot increase MDR after a certain limit and so they have to use some tactics to reduce reward points redemption costs by probably decreasing validity excluding certain MCC codes such as utility, wallet where MDR is low, to improve their cost to income, this has been done by Axis almost all their CCs are devalued and lounge access is restricted too premium cards, that shall be done, I think NPA should not be an issue rather we have to understand that the NIM will contract but they done what should be the appropriate valuation in that case I am trying to figure that out.

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  1. so if you are giving the cards to above 30 which method did you to calculate it will result in less revenue?

  2. they are getting the leads from parent sbi bank plus if you visit any reatil chain or shopping malls you will find sbi cc staffs, which aggressive marketing hdfc is doing??

  3. you are comparing a credit card company with traditional private bank… even sbi cards cross sell personal loans and insurance

  1. This is by observation because people who have just joined jobs and early in career will spend aggressively compared to ones who are in their 30s who might be bit conservative( Just my opinion , might be wrong).
  2. I have received calls on daily basis from hdfc , based on that I said.

@sanmar96 Thanks for the inputs. HDFC cards is not listed. So HDFC card valuation is unknown. SBI cards trades at 31 P/E (TTM) which is cheap considering 20+% sales and net profit growth in past 3 yrs. Even if we consider 15% in next 5 years CAGR, its cheap right now.

Only question to be asked is “Will SBI cards grow at 15% in next 5 yrs and maintain Net NPA < 1.5%?”. It does not matter whether they can do as good as HDFC cards or not.

Please share your view.


Similar feelings here, the likes of VISA and MASTERCARD trade at similar PE TTM. I expect SBI Card (which is focused on a growing market like India) to be given a better PE.

What I don’t understand is why is the market punishing it, and it is back to IPO price. I understand it was significantly overpriced at the time and probably correcting for that. Is there more to the story?

Invested and biased.


I suggest you to read their Con call. There are some concerns that are being raised by the whole industry.

Markets know better. If the business outlook was very positive, PE expansion would have happened by now.