Stock of SBI Cards and Payment Services fell over 3% amid a rising market today after brokerage Goldman Sachs initiated coverage on the SBI arm with a ‘sell’ call. SBI Cards share fell 3.39% to Rs 897.20 against the previous close of Rs 928.20 on BSE.
The large cap stock has fallen 3% in the last 3 days. SBI Cards share trades lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
In one year, the share has lost 5.72% and fallen 2.1% since the beginning of this year. Total 0.94 lakh shares of the firm changed hands amounting to a turnover of Rs 8.58 crore on BSE. Market cap of the company fell to Rs 85,575 crore.
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The stock hit 52 week high of Rs 1,164 on September 1, 2021 and 52 week low of Rs 860.05 on December 20, 2021.
The global brokerage assigned a sell call to the share with a 29.5% downward revision of price target to Rs 654. Goldman Sachs sees headwinds intensifying and rich valuations make risk reward ratio unfavourable. It expects earnings growth to moderate to 18% in FY22-25E against 27% in FY17-21.
SBI Cards is likely to face triple challenges ahead such as increasing popularity of alternates like Buy-Now-Pay-Later, regulatory changes and competition from capital-rich fintechs & banks, the brokerage said.
In Q2 of the current fiscal, SBI Cards and Payment Services reported a 67 per cent rise in net profit at Rs 345 crore on the back of good growth in retail and corporate spends. The pure-play credit card company had logged a net profit of Rs 206 crore in the same period a year ago.
Total income climbed 7 per cent to Rs 2,695 crore during July-September period of FY22, from Rs 2,510 crore in Q2 FY21. The increase was primarily due to higher income from fees and services during the quarter.
Meanwhile, Sensex rose 498 points to 60,242 and Nifty gained 142 points to 17,954. Maruti, Infosys and ITC were the top Sensex gainers, rising up to 3.47%.