SBICARD - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.3

📊 Financials: SBI Cards has reported quarterly PAT of ₹445 Cr vs ₹556 Cr previously, reflecting earnings moderation (-9.98% variation). EPS at ₹20.2 supports earnings visibility. ROE at 14.8% and ROCE at 10.4% indicate moderate capital efficiency. Debt-to-equity ratio of 3.33 is high, typical for credit card businesses but adds financial risk. Dividend yield of 0.29% is low, offering limited income support.

💹 Valuation: Current P/E of 43.3 is significantly higher than industry PE of 21.2, suggesting steep overvaluation. Book value ₹155 vs CMP ₹872 implies a high P/B multiple (~5.6x). PEG ratio of 7.42 highlights valuation far ahead of earnings growth. Intrinsic value appears lower than CMP, signaling caution despite strong brand positioning.

💳 Business Model: SBI Cards operates in consumer credit, focusing on credit card issuance and related services. Competitive advantage lies in strong brand association with SBI, wide customer base, and growing digital adoption. Risks include rising NPAs, regulatory oversight, and dependence on consumer spending cycles.

📈 Entry Zone: Technically, support lies near ₹820–₹850. CMP at ₹872 is close to DMA 50 (₹874) and DMA 200 (₹861), suggesting consolidation. Entry is advisable closer to ₹820 for margin of safety.

📌 Long-term Holding: Strong fundamentals, brand advantage, and growing credit card penetration make SBI Cards attractive for long-term holding. However, high leverage and stretched valuations require cautious accumulation, preferably on dips.

Positive

• 📊 EPS of ₹20.2 supports earnings visibility.
• 💳 Strong brand association with SBI ensures customer trust and market reach.
• 📈 ROE (14.8%) reflects moderate efficiency in generating shareholder returns.
• 📈 Increase in DII holdings (+0.26%) shows domestic institutional support.

Limitation

• ⚠️ High P/E ratio (43.3) compared to industry average (21.2).
• 📉 PEG ratio of 7.42 highlights valuation ahead of earnings growth.
• 💸 High debt-to-equity ratio (3.33) adds financial risk.
• 📉 Low dividend yield (0.29%) offers minimal income support.

Company Negative News

• 📉 Decline in FII holdings (-0.13%) indicates reduced foreign investor confidence.

Company Positive News

• 📈 Increase in DII holdings (+0.26%) shows domestic institutional support.

Industry

• 💳 Consumer credit sector trades at industry PE of 21.2, highlighting SBI Cards’ premium valuation.
• 📊 Industry growth supported by rising digital adoption and increasing credit card penetration in India.

Conclusion

⚖️ SBI Cards is fundamentally strong with brand advantage and growing market penetration, but valuations are stretched and leverage is high. Entry is advisable near ₹820–₹850 support zones. Long-term holding is justified, but accumulation should be cautious unless profitability improves and valuations normalize.

Would you like me to extend this with a peer benchmarking overlay against other consumer finance players like HDFC Bank (credit cards) and Axis Bank to highlight comparative valuation and efficiency?