SBI Cards and Payment Services shares rally 5% as Nomura and Nuvama upgrade ratings to buy, hike target prices
SBI Cards and Payment Services climbed as much as 5.1% on Monday to Rs 760.15 on the BSE after two brokerage firms Nomura and Nuvama upgraded the stock’s rating to 'buy’, while increasing their target prices to Rs 825 and Rs 850, respectively, signaling potential upsides between 8.5% and 12% from current levels.
Japanese brokerage firm Nomura highlighted that several near-term concerns, particularly around asset quality, are expected to diminish for SBI Cards and Payment Services. The brokerage said that it has observed a growing concentration of credit card debt in metro regions since FY23, with the share of the top eight metro cities in new sourcing showing an upward trend.
SBI Cards recorded its highest net card additions in November 2024 since December 2023, a positive indicator for growth. Nomura said it anticipates asset quality stabilizing over the next few quarters, projecting credit costs to decline progressively from 9.1% in FY25 to 7.5% and 7% in FY26 and FY27, respectively. Additionally, the brokerage said it expects the company to benefit significantly from any potential policy rate cuts in FY26.
Domestic brokerage Nuvama said it projects improvement in credit costs beginning Q4FY25, noting that SBI Cards' weak credit cycle appears to have peaked earlier than its peers. It also pointed to anticipated rate cuts by the Reserve Bank of India (RBI) as a potential tailwind for the company’s performance.
“While credit card delinquencies are rising for other players, we expect SBI Cards’ credit cost
