SBI Cards and Payment Services share price cracks 33% from IPO price; should allottees sell or hold?

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Published: April 13, 2020 4:05:48 PM

SBI Cards and Payment Services share price has tumbled 24 per cent in less than a month from its listing price. The performance of SBI Cards has been largely affected by the lockdown in order to contain the spread of the deadly coronavirus.

SBI cards, SBI cards and payment servicesThe outlook for the very short-term remains bearish on this stock as the company isn’t just functioning. SBI Cards is grossly affected by the present lockdown conditions

SBI Cards and Payment Services share price slipped as much as about 16 per cent today to Rs 501.25 apiece on BSE, eroding one-thirds of the investors’ wealth from its IPO price of Rs 755. Just about a month ago, SBI Cards and Payment Services got a bumper response to its IPO, but saw a depressed listing at just Rs 658, as coronavirus knocked the wind out of the share markets between the company’s IPO and listing. SBI Cards shares’ weak stock exchange debut on March 16 dashed investors’ hopes against most brokerage recommendations to subscribe to the IPO on the hopes of bumper listing.

“The onboarding of the new customers has virtually stopped, the offices are closed and the operational cash flow also remains affected,” technical analyst Milan Vaishnav CMT, MSTA told Financial Express Online. At closing, SBI Cards and Payment Services share price settled 15 per cent down at Rs 505.60 apiece on BSE in a weak market.

SBI Cards and Payment Services share price has tumbled 24 per cent in less than a month from its listing price. The performance of SBI Cards has been largely affected by the lockdown in order to contain the spread of the deadly coronavirus. “The outlook for the very short-term remains bearish on this stock as the company isn’t just functioning. SBI Cards is grossly affected by the present lockdown conditions to the extent that the listing also remained much weaker than expected,” Milan Vaishnav added.

Last month, during the Yes Bank moratorium fiasco, SBI Cards promoter, State Bank of India (SBI), announced it would bail out the debt-ridden private-sector lender Yes Bank investing more than Rs 6,000 crore in the bank. This also made the investors anxious. The fifth-largest IPO ever of India received bids worth Rs 2 lakh crore. The announcement of three months delay in loan payment has also added to the pressure on the stock. “Due to lock down and three months delay in loan payment allowed by the government, SBI Cards may see delay in recovery of current loan. Concerns over business environment post lockdown are keeping all NBFC stocks under pressure,” Vishal Wagh, Head of Research, Bonanza Portfolio Ltd told Financial Express Online.

With the ongoing conditions of volatility and uncertainty in the global as well as domestic equity markets, analysts suggest to avoid this stock for a short term investment perspective. Vishal Wagh advised investors to avoid this space currently. “For investors, who are in for at least 2-3 yr investment horizon and beyond, this represents an excellent opportunity to accumulate this stock at current levels,” Milan Vaishav suggested.

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