State Bank of India (SBI) supported SBI Cards and Payment Services (SBI Card) once again recorded a soft -quarterly demonstration. For this reason, after the December quarter results, the enthusiasm of analysts has faded on this stock. SBI card shares on the broker path fell 6 per cent to a low of Rs 712.15. However, finally, a slightly taken up by 0.57 per cent to close at Rs 763. The Sensex rose 0.83 percent.
According to analysts, the profit of SBI card was weak in the third quarter of FY 2025. He was under pressure of regulatory challenges on high loan cost, dull margin, fee income. For this stock, HDFC Securities has changed the rating to ‘add’ to ‘add’ and the price target has also been reduced from Rs 690 to Rs 637.
Brokerage believes, ‘Management has indicated a decline in liabilities during the third quarter of FY 2025 and is expected to reduce the loan costs from the current level. However, we hope that the loan cost will remain at a higher level (about 7 percent) compared to the levels before the epidemic.
In the third quarter of FY 2025, the loan cost of SBI card increased to 9.4 per cent, which was 9 per cent in the second quarter. MK Global Financial Services retained its reduction ratings, saying, ‘Management believes that these are the initial signs of pressure in SBI card credit card portfolio.
However, we would prefer to be cautious and focus on the fourth quarter trends of FY 2025 to indicate the trend to reversed. Keeping in mind the slow growth/fee, we have cut the income estimate of 14 percent/3 percent for FY 2025/FY 2026. MK Global Financial, however, has increased the price target for SBI card to December 2025 to Rs 750. The company management has predicted the cost-income ratio of 52-55 percent for the financial year 2025. The management has indicated a loan hike of 12–15 per cent in FY 2026.
The main factor for changes in income upgrade and evaluation rating is to reduce funding costs due to early normal and easier of rate cycle.
Asset quality
According to management, better asset mixture is increasing with a decrease in the structure of stage 2 and stage 3 and improvement in omissions. He said that this positive change is expected to continue in the fourth quarter of FY 2025. Gross non-performing assets (GNPA) for the quarter fell to 3.24 percent with 3 base points declining, and management expects further improvement in GNPA.