SBI Cards and Payment IPO opens on March 2. Is it good enough to ‘buy’? Here’s what analysts say

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February 20, 2020 1:35 PM

SBI Card and Payment Services IPO aims to raise about Rs 9,000 crore. The company is planning to issue new shares worth Rs 500 crore.

SBI Cards and Payment Services IPO will open on March 2, now that the company has got the go-ahead from capital market regulator SEBI. The bidding process will close on March 5, 2020, according to the company prospectus. It is expected to be the biggest public issue of the current financial year 2019-20, and aims to raise about Rs 9,000 crore. The company is planning to issue new shares worth Rs 500 crore. Analysts see SBI Cards and Payment Services IPO as a good investment option. After the huge success of IRCTC IPO, SBI Cards seems to be good for the retail investors, Vishal Wagh, Research Head, Bonanza Portfolio recently told Financial Express Online recently.

Citing the credit card spending growth in India, investment advisor Sandip Sabharwal told Financial Express Online that it can be a good investment option as internationally, MasterCard and Visa as stocks have also performed very well. However, key risks to the SBI group’s cards and payments unit include “regulatory risk on MDR/interchange fees, higher capital requirement and rising asset-quality risk given weakening macros or employment rates,” Emkay Global had said in a research report. The rising digitisation and under penetration of cards can offer a big credit card opportunity to India, Emkay Global further said.

The company will offer up to 130,526,798 equity shares via offer for sale route. This will include up to 37,293,371 share sale by SBI and up to 93,233,427 shares on offer by Carlyle Group (CA Rover), the prospectus, dated February 18, showed. Currently, SBI holds 74 per cent and CA rover Holdings holds 26 per cent stake in SBI Cards. The book-running lead managers for the SBI Cards IPO are Kotak Mahindra Capital Company, SBI Capital Markets, DSP Merrill Lynch, Axis Capital, HSBC Securities and Capital Markets, and Nomura Financial Advisory and Securities. The country’s largest PSU bank SBI would divest up to 4 per cent stake in SBI Cards through the issue.

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