SBI card drops 4% after more than 40 million shares changed hands via block deal


Shares of SBI Cards and Payment Services fell 4.4 percent to Rs 977 on BSE in intraday trading on Wednesday after more than 40 million shares changed hands via a block deal.

As of 9:15 a.m., around 41.89 million shares, representing 4.5% of SBI Cards and Payment Services’ total equity, changed hands at the ESB counter, according to exchange data. However, the names of the buyers and sellers could not be determined immediately.

US private equity fund CA Rover Holdings, a subsidiary of Carlyle Asia Partners, is seeking to sell a 4% stake in SBI cards and payment services worth $ 514 million or 3,728 crore, according to reports. of rupees through a block agreement. The sale price was set at Rs 981.80-1,022.10 each, down 3.9 percent from Tuesday’s closing price of Rs 1,022.

CA Rover Holdings held 15.86% stake in the Indian credit card company as of December 31, 2020, according to shareholder data.

At 9:35 am, SBI Cards cut losses slightly and fell 3.6 percent to Rs 985 on BSE, compared with a 0.17 percent rise in S&P BSE Sensex. A total of 59.95 million shares had changed hands on the counter of NSE and ESB until the time of writing.

Meanwhile, Morgan Stanley initiated cover on the SBI card with a target price of Rs 1,300. According to the brokerage, SBI Card is pure play on the unsecured consumer credit opportunity in India. With a strong affiliation, State Bank of India (SBI), it is a differentiator when it comes to the SBI card.

“We believe that the main catalyst for the reclassification will have to be the year-over-year reduction in credit costs, the articulation of innovations, as well as the defense mechanisms against fintechs. The reasons for the downgrade are more likely to be one. increase in credit, costs or moderate growth, ”the foreign broker said in its report.

SBI Cards has demonstrated a solid track record of growing its card book / profits. This allowed him to strengthen his lead as the second-biggest card player in terms of exceptional cards and spending. The company achieved an average RoA / RoE of approximately 5 percent / 29.5 percent in fiscal years 18-20.

However, those at Motilal Oswal Financial Services expect a loan / earnings portfolio CAGR of 27 percent / 47 percent in fiscal years 21-23, while margins could remain broadly stable. “Asset quality will likely remain under pressure with a higher proportion of the book being restructured. Therefore, the cost of credit is expected to remain high in the near term and moderate from FY23,” the brokerage said in a statement. launch coverage report (neutral rating; target price of Rs 1,200). Analysts believe the company will report healthy performance ratios with a RoA / RoE of 6.6% / 28.4% in fiscal 23.

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