SBI Cards shares jump 6% as Goldman Sachs upgrades stock, raises target price
SBI Cards and Payment Services on Friday surged 6% to its day’s high of Rs 811.85 after the global brokerage firm Goldman Sachs upgraded the stock to a buy rating, raising its target price to Rs 913 from an earlier Rs 652.
The upgrade from the global brokerage firm comes as it believes that the stock’s downcycle is nearing the bottom and the improving pre-provision operating profit (PPOP) outlook is likely to support the EPS visibility.
Goldman Sachs also believes that the company could be nearing its peak of credit costs over the next 2-3 years and there is an expectation of improving the cost-to-income ratio by 430 bps over FY24-26. A pick-up in loan growth from FY26 is also anticipated by Goldman Sachs.
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SBI Card and Payment Services had reported a profit after tax (PAT) of Rs 594.45 crore for the quarter that ended June 30, 2024, which was flat on a year-on-year (YoY) basis while the company’s revenue from operations for the reported quarter stood at Rs 4,359 crore, up 11% on YoY versus Rs 3,912 crore in the corresponding quarter of the last financial year.
The interest income of SBI Cards stood at Rs 2,243 crore in Q1FY25 up by 24% YoY and 5% QoQ and its earnings before credit cost stood at Rs 1,900 crore, up 25% on a QoQ basis. It witnessed a 4% QoQ uptick.
In the last one year, the shares of SBI Cards have declined by 3.7% while in the current calendar year so far, they
