Motilal Oswal has given Buy recommendation for SBI Cards and Payment Services recommended buy rating on the stock with a target price of Rs 1100 in its research with a target price of Rs. 1100 in its research report issued on Apr 30, 2022

Motilal Oswal’s research report on SBI Cards and Payment Services

SBICARD reported a mixed quarter, with a miss in NII/PPOP, while net earnings delivered a significant beat, aided by a sharp decline in provisions. PAT grew 231% YoY to INR5.8b (MOSLE: INR4.5b). – NIM contracted by 80bp to 13.2% in 4Q (v/s 14% in 3QFY22) due to a significant (-110bp) moderation in yields as the Revolver mix fell to 25% v/s 27% in 3QFY22. Trends in spends both Retail/Corporate was healthy at 40%/102% YoY. Overall spends grew 51% YoY. – GNPA ratio moderated marginally by 18bp QoQ to 2.22%, while NNPA fell 5bp QoQ to 0.78%. RBI-RE book declined to sub-1%. RoA/RoE stood robust at 7%/30.4% in 4QFY22. – We expect the company to deliver 50% earnings CAGR over FY22-24, leading to a RoA/RoE of 7.3%/30.6%. We maintain our Buy rating.

Outlook

We expect the company to deliver 50% earnings CAGR over FY22-24, leading to a RoA/RoE of 7.3%/30.6%. We maintain our Buy rating with a TP of INR1,100 per share (29x FY24E EPS).

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