SBI Cards and Payment Services Ltd IPO (SBI Cards IPO) Review: Should you Invest?

SBI Cards and Payment Services Ltd IPO (SBI Cards IPO), is raising approximately ₹10,000 crore from the equity market. The IPO traders are expecting huge gain from this issue as they anticipate a record demand for this issue.

SBI Cards is 74% owned by SBI and the remaining 26% is owned by Carlyle Group, which it bought it from GE in 2017. Through this IPO, SBI will be divesting 4% of its stake, while Carlyle will be selling 10% of its stake. Therefore, SBI and Carlyle Group will offload 3.73 crore shares and 9.32 crore shares respectively. The company’s post-issue market capitalization is projected at up to ₹70,891 crore. The Investment bankers of Axis Capital, BofA Securities, Nomura and SBI Capital Markets are managing this IPO.

There is an Employee Quota in this issue and the employees of SBI will be offered a discount of Rs 75. 50 percent of the IPO has been reserved for QIBs (Qualified Institutional Buyers), and 15 percent for Non- Institutional Bidders (NIBs).

SBI Cards – Company Profile

• The company is the second largest credit card issuer in India and has showed strong performance in terms of growth and profitability. SBI Cards provides a wide range of credit cards to individual and corporate clients, that encompass lifestyle, rewards, shopping, travel, fuel, corporate cards, etc.
• The company leads in market with regard to customer acquisitions by using physical and digital channels in India.
• The company’s promoter is SBI, which has strong brand recognition. As a subsidiary of SBI, the company has access to SBI’s huge network of 21,961 branches across India, which enables it to market its cards to a huge customer base of 445.5 million customers.
• The company has partnerships with leading brands across industries. SBI Cards has partnered with Air India, Apollo Hospitals, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money and Yatra, amongst others. 

SBI Cards IPO Detail

• Issue Open: March 2, 2020 – March 5, 2020
• Issue Type: Book Built Issue IPO
• Issue Price: Rs 750-Rs 755 Per Equity Share
• Issue Size: 137,193,464 Eq Shares of ₹10 for the total of ₹10,354.77 Cr
• Fresh Issue: 6,622,517 Eq Shares of ₹10 for the total of ₹500.00 Cr
• Offer For Sale: 130,526,798 Eq Shares of ₹10 for the total of ₹9,854.77 Cr
• Minimum Order Quantity: 19 Shares
• Listing At: NSE, BSE
• Listing Date: On March 16, 2020
• Pre Issue Holding of the Promoters:74%
• Post Issue Share Holding of the Promoters: 69.51%

Should you Invest?

The company’s total income has grown at a CAGR of 44.9% and the revenues from operations have risen at a CAGR of 44.6% between fiscal 2017 & 2019. The company has posted the net profit growth at a CAGR of 52.1% during the period

The investors should “subscribe” to SBI Cards IPO for listing gain.

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