SBI Cards shares fell 5% as brokerages downgraded stock due to weak margin outlook, increased funding costs, and sub-par quarter.

SBI Cards and Payment Services shares fell over 5% on Monday after brokerages downgraded the stock due to a sub-par quarter marked by elevated provisions, a weak margin outlook, and increased funding costs. The recent hardening of interest rates and the impact of risk weights are expected to exert pressure on funding costs in the coming quarters. While spending growth remains healthy and the company sees healthy traction in new card additions, analysts have cut their FY24E/FY25E EPS estimates by 2%/3% factoring in higher credit costs. The revised rating is Neutral, with a target price of Rs 850.

January 29, 2024
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