The SBI Cards share price slumped 3% intra-day on October 27, after Nuvama Institutional Equities cut the rating to ‘Hold’. However, the brokerage maintained its target price at Rs 1,025, which implies an upside of 9.5% from current levels. What’s the big investment rationale and what does it mean for investors going forward?
Here is a detailed analysis of Nuvama’s outlook on the stock and key levels to watch-
Nuvama on SBI Cards: NIM stayed flat, missed estimates
The NIM stayed flat sequentially despite a 51 basis points YoY decline in Cost of Funds (CoF) due to a higher share of transactors, part of which will convert to Interest Earning Assets (IEA) in Q3. Credit cost contracted 4% QoQ to 9%, but missed Nuvama’s estimates by 5%. Nonetheless, the company’s management guided that credit cost would fall below 9% in FY26.
However, the company’s credit cost declined in Q2 FY26 along with a strong growth in retail spends (9% QoQ) and receivables (6% QoQ), which were boosted by festive demand.
The brokerage has slashed EPS estimates marginally by 3.4% to Rs 23.5 for FY26 from Rs 24.3. “The stock is trading at 40x and 27x PE forward for FY26 and FY27, respectively, leaving no room for upside,” said Nuvama in a report.
SBI Cards Q2 FY26 results
SBI Cards posted a 10% YoY jump in its net profit, standing at Rs 445 crore in the second quarter of the current financial year, compared to a net profit of Rs 404 crore in Q2 FY25. However, the net earnings saw a sharp drop of 20% QoQ.
The company reported a 13% YoY increase in total income to Rs 5,136 crore in Q2 FY26, compared to Rs 4,556 crore in Q2 FY25. The company’s interest income rose by 9% YoY to Rs 2,493 crore in Q2 FY26, up from Rs 2,290 crore in the same period last year.
SBI Cards stock performance
The share price of SBI Cards has fallen by over 3% in the last five trading sessions. The stock has given a return of 4.4% in the past one month and 4.3% in the last six months. SBI Cards’ stock price has raised investors’ wealth by 35% in the past one year.