SBICARD - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.7

📊 SBI Cards shows strong brand backing and profitability, but high valuation and leverage dilute its attractiveness. It’s a stable financial play with moderate long-term potential.

📈 Financial Overview

• Quarterly Profit: PAT declined from ₹556 Cr to ₹445 Cr — a 9.98% drop.
• ROE & ROCE: ROE at 14.8% is solid; ROCE at 10.4% is modest.
• EPS: ₹20.2 — supports current valuation.
• Debt Ratio: Debt-to-equity at 3.33 — high, typical for credit card NBFCs.

💹 Valuation Metrics

• P/E Ratio: 43.6 — significantly above industry average of 22.6.
• P/B Ratio: 5.66 — reflects premium pricing.
• PEG Ratio: 7.48 — indicates overvaluation relative to growth.
• Intrinsic Value: Estimated near ₹800–820, suggesting current price of ₹878 is slightly overvalued.

🏢 Business Model & Competitive Edge

• SBI Cards is India’s second-largest credit card issuer, backed by SBI’s brand and distribution network.
• Its diversified card portfolio and digital onboarding offer scalability, but growth is slowing amid rising competition.

📉 Entry Zone & Holding Guidance

• Entry Zone: ₹820–850 range is preferable; RSI (43.2) and MACD (8.65) suggest neutral momentum.
• Long-Term Holding: Suitable for 2–3 year horizon for stable returns, not aggressive growth.

✅ Positive

• Strong ROE of 14.8% and consistent profitability.
• Backed by SBI — ensures trust and distribution reach.
• Digital onboarding and diversified card offerings.

⚠️ Limitation

• High debt-to-equity ratio (3.33) — adds financial risk.
• PEG ratio of 7.48 — signals overvaluation.
• Quarterly profit decline and slowing growth.

📉 Company Negative News

• Q2 FY26 profit fell 10% YoY to ₹445 Cr due to higher provisioning and slower interest income growth

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📢 Company Positive News

• Interest income rose 9% YoY to ₹2,490 Cr in Q2 FY26, showing resilience in core operations

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🌐 Industry

• India’s credit card industry is growing but facing margin pressure due to rising competition and regulatory scrutiny.
• Industry P/E is 22.6 — SBI Cards trades at a premium due to brand and market share.

🧾 Conclusion

• SBI Cards is a stable NBFC with strong brand backing and profitability.
• Valuation is stretched and growth is moderating; suitable for conservative long-term investors.

Sources

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