SBI Card shares fall 3.75% after Q3 earnings miss estimates

SBI's cards and payment services shares fell for the second straight session on Tuesday after the arm of country s largest lender SBI reported December quarter earnings that came below expectations. SBI Cards and Payment Services stock fell 3.75% to Rs 718.25 against the previous close of Rs 746.20 on the BSE. The stock has lost 6.5% in two sessions, taking into account the intraday low today.

SBI Card stock was lower at 744.95 on the BSE today. After the earnings announcement, the stock fell to 4.63 per cent to Rs 731.60.

The share has lost 14.48 per cent in a single year and fell 8.54 per cent since the beginning of the year. A turnover of 6.11 crore on the BSE was recorded by the total of 0.84 lakh shares of the firm. The firm's market cap fell to 68,482 crore.

The relative strength index RSI of SBI Card stock stands at 34, signaling neither the stock is overbought nor oversold in terms of technicals. The stock has a one-year beta of 1.1, indicating high volatility during the period. The PE ratio of SBI Card is 33.30. SBI Card shares are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

In Q 3 of the current fiscal, SBI Card reported a 32.1 per cent increase in net profit to Rs 509 crore. The net profit was 386 crore in the year-ago period. The total revenue climbed 16% YoY to Rs 3,656 crore compared to Rs 3140 crore in Q 3 of the previous fiscal year.

Prabhudas Lilladher saw the SBI Card report a net profit of Rs 553.7 crore up 43.5% year-on-year, up 5.3% quarter-on-quarter Net Interest Income NII was expected to rise 23.3 percent Y-o Y up 10 percent Q-o - Q to Rs 1,228. According to Prabhudas Lilladher, 2 crore are predicted to be spent.

Interest income increased by Rs 336 crore to Rs 1,609 Cr for Q 3 against Rs 1,273 Cr for Q 3 FY 22. Income from fees and services rose to Rs 213 crore for Q 3 FY 23 against Rs 1,457 crore in the corresponding quarter of the last fiscal year.

Gross non-performing assets, NPAs, fell to 2.22% of gross advances on December 31, 2022, compared to 2.40% as on December 31, 2021. Net non-performing assets were 0.80% as of December 31, 2022 against 0.83% as on December 31, 2021.

YES Securities has lowered its price target to Rs 940 and assigned an add call to the SBI Card stock. The target price is expected to have an upside of 26.1% compared to the current market price of Rs 745.

The re-rating of stock trades at six times FY 24 P ABV would depend on improvement in RoA RoE outlook, despite underwhelming trends in receivables, NIM, fees and operating expenditure. We maintain the ADD rating while lowering the 12 month price target to Rs 940 on trimming the target multiple. Financial services firm Motilal Oswal has lowered its target price for the stock after Q 3 earnings.

We cut our estimates by 5 -- 7% to account for lower NII and slightly higher provisions. We estimate SBI Card to deliver a 34% earnings CAGR over FY 2325, leading to RoA RoE of 6.5% 27.9%. Motilal Oswal said that the buy should be maintained with a target of Rs 960.