SBI Cards Share Price Target 2025: 'Card Issuances Ahead Of Peers', HDFC Sec Shares View - Details

HDFC Securities is bullish on SBI Cards. In its special report on the company, the brokerage house has initiated an 'Add' rating on the SBI Cards stocks. In the report, HDFC Securities listed, among others, the increase in card acquisitions in Q3FY24, as one of the positives for SBI Cards. The report also listed several other key technical and fundamental highlights for the company ahead of 2025.

“We hack our FY25/FY26 earnings forecasts by 10 per cent /1 per cent  to adjust for lower margins and fee income and higher loan loss provisions. We expect SBI CARD to deliver sub-4 per cent  RoA during FY25 and sub-5 per cent  RoA during FY26E-FY27E,” the report said. 

SBI Cards Share Price Target

According to HDFC SEcurities report, the target price of SBI CARDS is Rs 690. Earlier, the brokerage had pegged the target at Rs 700. Meanwhile, on wednesday, SBI Cards share traded at Rs 677.65, up over 2 per cent from its Tuesday close.

HDFC Securities on SBI Cards: Profit 

According to HDFC securities report, SBI CARD’s profitability continues to be impacted by high credit costs and a lower share of revolving loans, leading to muted risk-adjusted margins. Regulatory challenges and subdued fee income further add to the strain.

“New card acquisitions have picked up pace in Q3FY24, resulting in CIF market share gains during Oct-Nov’24,”  the report stated.

SBI Cards: Decline in Spends and Receivables

The report further noted that corporate spends have remained muted for the last few quarters, leading to overall unit card spend below industry average. It further said that SBI Card’s retail unit spends grew by 14 per cent  YoY in Q2FY25, but corporate spends have remained weak.

”Per-card spends ( Rs  13K) and receivables lag behind the industry average of  Rs  16K, largely due to a decline in revolving loans,” the report noted.

SBI Cards: Persistent Credit Costs

Elevated credit costs (9 per cent  in Q2FY25) continue to pose a challenge, with recovery from overleveraged borrowers taking longer than expected. Revolving loans have also dropped to 23 per cent  compared to pre-Covid levels of 35-38 per cent - HDFC Securities said.

SBI Cards: Long-Term Structural Challenges

Regulatory pressures, rising delinquencies, and lower revolving loan rates are likely to result in structurally weaker returns, with steady-state ROA (Return On Assets) projected to remain 100 bps below pre-Covid levels.

Revised Estimates

FY25/FY26 earnings estimates have been cut by ~10 per cent  and 1 per cent , respectively, with a revised target price of  Rs  690, reflecting a cautious outlook for SBI CARD.