Seeing the positive response, market watchers are giving a listing price target of up to Rs 1,200 on SBI Cards shares, against the IPO price of Rs 750-755.
SBI Cards and Payments Services IPO continues to see a positive response from investors on the second day of the bidding. As of 3.15 PM, the issue has been subscribed 76 per cent. It has received bids for around 6 crore shares against the total offering of 10 crore shares under various categories. Yesterday, on the first day of subscription, the company received 39 per cent subscription. Seeing the positive response, market watchers are giving a listing price target of up to Rs 1,200 on SBI Cards shares, against the IPO price of Rs 750-755. However, analysts say that their target listing price is largely dependent on the IPO demand.
“At the expected listing price of Rs 1,000, SBI Cards would have a market capitalization which is 36% of SBI current market capitalization of Rs 2,74,000 crore. So either SBI is very cheap or SBI Card IPO is very expensive,” Investment Advisor Sandip Sabharwal said in a tweet. The reasons for the expected listing price of Rs 1,000 are largely in line with IPO demand and post listing buying, Sandip Sabharwal told Financial Express Online, adding “If the subscription is lower than expectations then listing can be more near 925-950”.
Watch: All you need to know about SBI Cards IPO; should you subscribe or not?
Citing rising discretionary spends and non-cash economy, brokerage firm Prabhudas Lilladher has initiated coverage on SBI Cards IPO, giving it an expected target price of Rs 1,191 with a ‘buy’ rating. The brokerage firm mentions the reasons such as broad reach and parentage of SBI, leadership in co-branded cards and 40 per cent contribution of premium cards, for this 57 per cent upside.
Another analyst also believes SBI Cards will deliver decent listing gains but adds that the actual calculation can be done after final subscription figures only. “The grey market is indicating a premium about 45% upside, by looking at demand in the grey market earlier we were expecting a gain of 50℅. However, grey market premium has come down sharply after a recent fall in markets, therefore, instead of 50% listing gains, we can expect decent listing gains,” Santosh Meena, Senior Analyst, Tradingbells said.
SBI Cards has raised Rs 2,769 crore from anchor investors. As per the regulatory filing, 12 mutual funds among the 74 anchor investors have been allotted a total of 36.7 million shares at the offer’s upper price band of Rs 755 apiece. Meanwhile, technical analyst expects 8-12 per cent listing gains citing that issue is being offered at a higher premium. For a longer-term perspective, technical analyst Milan Vaishnav has given the price target of Rs 950-1,000. “There is a caveat that we are not grappling with any incremental news flow, especially with regard to the spread of coronavirus. The upsides, even from the longer-term perspective are unlikely to be more due to fundamental reasons,” Vaishnav further added.