It is the second-largest credit card issuer in the country. Its share of the credit card market (number of credit cards) rose from 17.6 per cent in March 2019 to 18.1 per cent as on November 30, 2019. In terms of total credit card spends, its share rose from 17.1 per cent in 2018-19 to 17.9 per cent in the eight months ended November 30, 2019, according to the Reserve Bank of India (RBI).
About the offer
The net proceeds of the fresh issue are proposed to be utilised for increasing the capital base to meet the future capital requirements. Additionally, the company expects to achieve the benefit of listing of the equity Shares on the stock exchanges. The price band of the issue and bid lot will be declared at least two working days prior to the offer opening date. The bidding process will close on March 5.
Offer break -up
What analysts say
According to Emkay Global Financial Services, India’s credit card industry has more than doubled over the past four years in terms of number of cards to 53 million, but it still remains significantly under-penetrated, leaving room for huge growth. Credit rating agency CRISIL estimates that the Indian credit card industry’s outstanding book will see 23 per cent compound annual growth rate (CAGR) to reach $47 billion by FY24E from current $14 billion, which will still be just about 6 per cent of the US’s current outstanding card debt.
As regards, SBI, it has the potential to scale up further, riding the Indian consumers’ increasing predilection for credit cards and higher penetration in its captive bank customers, wrote Anand Dama, analyst at the brokerage firm along with Rahul Malani and Neelam Bhatia in a note dated January 8, 2020.
Adding, "It also commands a relatively strong RoA of nearly 5.5 per cent (normalized in H1FY20), driven by better margins/fees on better revolve rates and contained credit costs, while the benefit of lower tax rate can help return on assets (RoAs) in the near term. However, it needs to focus on improving operating leverage, spends per card via focusing on open market sourced carded/premium customers to drive fees and convert spends into EMIs/Term Loans to bring stability to its otherwise superior margins/RoAs."