Synopsis: SBI Cards and Payment Services Ltd. experienced a significant surge in its stock price, reaching a 52-week high, following an upgrade by global brokerage Macquarie to an 'outperform' rating and an increased price target of Rs. 1,000. This positive momentum comes amid a backdrop of mixed financial performance, including a notable decline in net profit for the December quarter of FY25.
On Thursday, SBI Cards and Payment Services Ltd. witnessed a remarkable ascent in its stock value, climbing 6.13% to Rs. 866.85 on the Bombay Stock Exchange (BSE), up from the previous close of Rs. 816.75.
This surge propelled the stock to a fresh 52-week high, elevating the company's market capitalization to Rs. 82,101 crore.
The rally was primarily driven by global brokerage firm Macquarie's decision to upgrade SBI Cards' rating to 'outperform' and raise the price target to Rs. 1,000.
Macquarie's analysis indicated that credit card slippages are plateauing, and they anticipate a substantial decline in credit costs over the next two quarters.
Additional catalysts identified include falling interest rates, easing liquidity, tax cuts, and the Reserve Bank of India's increasingly accommodative stance towards unsecured loans.
Despite the recent stock performance, SBI Cards reported a 30% year-on-year decline in consolidated net profit for the December quarter of FY25, with net profit standing at Rs. 383.2 crore compared to Rs. 549.1 crore in the same quarter of the previous year.
Consolidated revenue from operations saw a marginal increase of 1%, reaching Rs. 4,767 crore, while net interest income (NII) decreased by 3.5% to Rs. 3,790.1 crore from Rs. 3,926.2 crore a year earlier.
In light of these developments, the company's Board of Directors is scheduled to meet on Monday, February 17, 2025, to consider the declaration and payment of an interim dividend for the financial year 2024-25.
The firm has designated February 25, 2025, as the 'Record Date' for this purpose.
Conclusion
SBI Cards' recent stock performance reflects a complex interplay between market optimism, driven by favourable analyst assessments, and underlying financial challenges, as evidenced by the decline in quarterly net profits.
Investors should consider both the positive market sentiment and the company's financial fundamentals when making investment decisions.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
