SBI Cards share price hits 15-week low: What's fueling downturn?
What's the story
SBI Cards and Payment Services Ltd's shares plummeted over 6% today, hitting a 15-week low of ₹834.75 per stock. The fall comes after several brokerages lowered their price targets following the company's June quarter results, which fell short of market expectations due to higher write-offs. SBI Cards is mostly owned by India's largest lender, the State Bank of India (SBI).
Financial performance
A look at the financials
For the April-June quarter of the present fiscal year, SBI Cards posted a 6% decline in net profit to ₹556 crore from ₹594 crore, in the same period last year. This is the fourth consecutive quarter of declining profits as the firm continues to deal with high delinquencies. However, total revenue grew by 12% YoY to ₹5,035 crore during Q1 FY26.
Increased expenses
Gross write-offs surged by 32%
SBI Cards witnessed a 23% YoY increase in impairment losses and bad debt expenses, which reached ₹1,352 crore against ₹1,101 crore in the year-ago period. The company's gross write-offs also surged by 32% from last year to ₹1,280 crore.
Market reaction
HSBC and Bernstein have cut their price targets
Global brokerages such as HSBC and Bernstein have cut their price targets for SBI Cards. Bernstein has an "underperform" rating on the stock with a target of ₹690, citing high credit costs as a consistent metric for the company. Macquarie remains "neutral" on the stock with a target of ₹1,040, noting that falling funding costs could cushion margins this fiscal year.
Analyst insights
Morgan Stanley has downgraded rating to 'underweight'
Morgan Stanley has downgraded SBI Cards to "underweight" and lowered price target to ₹710. The brokerage said that credit cost estimates were missed due to higher stressed asset creation and a bit rise in expected credit loss (ECL) coverage.