SBI Cards IPO – A must apply IPO of 2020

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SBI Cards IPO Overview

SBI Cards is a subsidiary company of parent company State Bank of India ( SBI) – The largest bank in India which has the highest number of branches across India. SBI Cards is 2nd largest Credit Card issuer in India, as their parent company SBI is having presence across the nation and SBI cards are offering a wide range of Credit cards to various social classes of Individual and corporate clients. SBI Cards is growing at CAGR of around 45% in the last 5 years and their Profits are growing at around 52% in the same period.  Is this IPO worth applying?, what are the major factors to consider before applying for this  IPO? can we expect Listing gains in this  IPO??  continue reading to know more.


SBI Cards IPO Synapsys – Company Details

SBI Cards started in 1998 as SBI Cards and Payment Services Limited. SBI Cards offers many varieties of credit cards with key benefits like Travel privileges, Lifestyle, Dining Experiences, IRCTC offers, Fuel, Airlines, and many Ticketing agents like Make my trip, Yatra, etc.

Being a subsidiary of SBI, SBI Cards has the major advantage of a huge customer base across India with more than 22,000 Branches across the nation, SBI is present in almost every part of India and can influence the majority of their customers to take Credit cards.

SBI Cards is the 2nd Largest Credit card company with an 18% market share in the number of Credit cards issued in India and around 17.5% share in Credit Cards spends in India.

The company SBI Cards is growing at CAGR of around 45% in the last 5 years and their Profits are growing at around 52% in the same period.

SBI Cards IPO is the First Credit Card company to be Listed in Indian Exchanges and other competitor companies are part of their parent companies like HDFCBank, Kotak, YesBank Etc, Depending on the success of SBI Cards IPO, other bankers may proceed with IPOs.

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How SBI Cards Generate Income and Profits? What are their costs?

SBI Cards issues Credit card to Individuals and Corporates for mainly Short term money needs and to have easier transactions to their customers.

SBI cards spend in below major heads

  1. Interest Cost
  2. Rewards Programmes
  3. Promotional expenses
  4. Administrative expenses and Technology development

The company SBI cards generates income below sources.

  1. Transaction fees received by Marchant
  2. Interest Fees from customers
  3. Late payment fees from customers
  4. Credit card issuance and annual charges- mostly this is passed on to customers as part of rewards.

As money is being given for the very short term, most of the customers swipe cards for emergencies like medical, marriage expenses, and few unplanned activities like Foreign travel, etc. These generally end up paying interest charges. It is common that many customers are enjoying benefits provided by the card issuing companies without paying any charges ( around 50%), these customers enjoys from the money of others who pay interest for unplanned spending.

SBI Cards enjoys higher interest income for delayed payments, it is estimated that almost 50% of salaried Individuals are holding Credit cards and this is growing at a much faster rate, as these days Credit Card is a must-have product for Middle-class society.


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SBI Cards IPO – Key Details

The SBI Card IPO is recently approved by SEBI and is ready to accept IPO subscription, below are the key dates.

Subscription Open date: 2nd Mar 2020

Subscription Closing Date: 5th Mar 2020

Share price range: Rs. 750 to Rs.755 (Tentative )

IPO share price face value is Rs. 10 per share

IPO Lot value for applying IPO: Max Rs. 15,000/- per Lot

IPO Total value under sale: Rs. 9000Cr

IPO Listing date: 16th Mar 2020

SBI cards Listing in: NSE/BSE


SBI cards IPO has a separate allocation for the below category of investors.

  1. Retail investors -35%
    1. Parent company SBI  share Holders
    2. Employees of SBI and SBi cards
    3. Retail individual investors
  2. QIB investors – 50%
  3. NIB investors  – 15%


For Complete details, you may download DRHP from this link SBI Cards IPO


Where this SBI Cards IPO money will be used?

As explained in the DRHP of SBI Cards IPO,  the money raised from IPO will be used in 2 parts as below.

  1. The Offer For Sale: SBI cards Parent company is selling their stake in IPO, hence this part of the money will be going to parent SBI, and this will not be available for SBI Cards.
  2. Fresh Issue of Equity Shares: SBI Cards is issuing fresh shares in IPO, as this is a fresh issue, the money will be available for SBI Cards and this will be utilized for expenses of IPO and future business expansion of SBI cards. It is expected that Rs. 500Cr is available in this part out of total Rs. 9000Cr.


Past Financials Performance of SBI Cards IPO.

SBI CARDS IPO Financial - Invest with confidence
YearRevenue in Cr% change ( YOY)Profits after Taxes in Cr% change ( YOY)PAT % on Revenues
2019 - Upton Dec 2019*7240116134.5% * upto Dec1916%


  1. The company SBI Cards has generated Revenue of 3471Cr for 2016-17 FY,  5370Cr for FY 2017-18, 7286Cr for FY 2018-19 and for 2019 20 FY, the company has generated  7240Cr Revenue for just 9 months up to Dec 2019.
  2. The company SBI Cards has generated Profits after Tax ( PAT) of 372.8Cr for 2016-17 FY, 601.1Cr for FY 2017-18, 7286Cr for FY 2018-19 and for 2019 20 FY, the company has generated  7240Cr Revenue for just 9 months up to Dec 2019.
  3. The company SBI cards IPO revenues and Profits are constantly growing year on year.

What are the positive factors of SBI Cards IPO?

  1. Extensive customer database from their parent company SBI, SBI cards can expand their cardholder’s growth multifold in the long term.
  2. Brand value of SBI cards is strong
  3. SBI cards offer a good range of Credi cards for each class of society customers with unique benefits and rewards.
  4. SBI cards is a well-established company and can easily adapt to any modern technologies in the industry.
  5. One of the major Credi card player in India with highest Revenue Growth and Profits in the past
  6. SBI cards has maintained consistent growth of Revenues and Profits, and it is much likely to continue.
  7. SBI cards has a track record of optimizing its risk management and have a proven record of profits in spite of defaults by a few cardholders.

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What are the Negative factors of SBI Cards IPO?- Reasons for not to invest in SBI cards IPO.


as we are aware share price is highly volatile and following major points will adversely affect the share price of SBI Cards IPO and their revenue and Profits may get impacted with these factors. investors must be aware of such facts which are factored in the market.


  1. As of today, SBI Cards is the beneficiary of their parent company SBI which has used strong Brand value of Promotor for its operations, However in the future in case if any bad news of parent company SBI will have an adverse impact on SBI cards and also SBI may stop supporting SBI cards in future.
  2. Normally credit cards are being issued to customers without any supportive guarantees/collateral from customers, in case of default of payment by the customer, SBI Cards will not be able to recover costs easily, this will impact the profits of the company.
  3. Credit cards market is having high competition from other banks and many e-wallet service providers, in case if SBI cards unable to manage well to such competition, there will be fewer transactions and fewer revenues and profits.
  4. In case of any cyber-attacks and fraudulent use of its cards by any hackers, Customers will lose trust in SBI cards and lose their hold in the business.
  5.  In the case of cyberattacks, apart from reputation, losses of money will also impact SBI cards’ bottom line.
  6. many such risk factors are listed in their DRHP of SBI Cards IPO.


SBI Cards IPO – Share price check – How an investor should see

considering their last 3 years average EPS of 7.97, the P/E of SBI cards works out to be around 95x its share price ( considering the upper price of 775/share).

considering FY 19 earnings, P/E works to be at 80x, and for current FY 20 ( 9 months earnings), is P/E works out to be 60x.

Hence SBI cards IPO share price is priced in the range of 60x to 80x means the company is asking price is 60 to 80 times their yearly profit.  as company revenue growth is high it is expected to keep these valuation high and investors should get benefitted.

There are no other listed Peers who issue credit cards for comparing these valuations.



considering the facts mentioned above, SBI cards IPO is a wonderful company that generates profits and cash from the business for shareholders.

Also, SBI Cards IPO is having a high demand for applying IPO, which will translate to healthy listing gains, as demand is high probability of allotment in SBI cards IPO is less, one must apply from different Demat accounts of family members to get maximum chances. one can Open Free Demat account to apply for this IPO.


All the best for Listing gains and company is good for medium to Long term view as well.

Disclaimer: This analysis is only for information purposes and not advice on investment. Considering listing gains, I am having an interest in applying for this SBI Cards IPO.


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