Should you bet on SBI Cards and Payment post its Q2? Analysts weigh

SBI Cards and Payment Services posted its second quarter (Q2FY26) results on Friday, after market hours. At 10:09 AM, SBI Card's share price was trading 2.69 per cent lower at ₹905.4 per share. In comparison, BSE Sensex was at up 0.67 per cent at 84,772.38.

Brokerages' view on SBI Card stock

Nuvama Institutional Equities has downgraded SBI Card stock to ‘Hold’, keeping the target at ₹1,025 per share. 

 

The brokerage sees no upside from current levels and expects the return on assets (RoA) to remain below the normalised level through our forecast period. “The stock is trading at 40x/27x PE FY26E/27E, leaving no room for upside,” Nuvama noted.

 

Meanwhile, according to reports, Morgan Stanley has maintained its ‘Underweight’ rating and has cut the target to ₹700 per share from ₹710. 

 

The brokerage believes SBI Card has steep valuations and market estimates of credit costs and earnings are too optimistic. It sees a structural risk to growth, return on equity (RoE) and de-rating. 

 

On the other hand, ICICI Direct has upgraded the rating to ‘Buy’ from ‘Hold’, and raised the target to ₹1,100 per share from ₹1,000.

 

“While delinquencies seem to peak out with a gradual improvement in credit cost, revival in growth remains an imperative catalyst. Strong festive and corporate spends, aided by goods and services tax (GST)-cut driven consumption and lower funding costs, underpin earnings visibility,” the brokerage noted. 

SBI Card Q2 results: Key highlights 

• The company reported a net profit of ₹445 crore, as compared to ₹404 crore a year ago and ₹556 crore in Q1. 
• Its revenue from operations stood at ₹4,961 crore, as compared to ₹4,421 crore, up 12 per cent year-on-year (Y-o-Y) and 1.7 per cent quarter-on-quarter (Q-o-Q).
• Card issuance grew 7per cent Q-o-Q to 9.36 lakh, while spends grew 31 per cent Y-o-Y and 15 per cent Q-o-Q to ₹1,07,063 crore, keeping market share stable. Despite higher transactors, receivables rose 8 per cent Y-o-Y at ₹59,845 crore.
• Cost of funds improved 69 basis points (bps) Q-o-Q to 6.4 per cent, keeping net interest margins (NIM) steady at 11.2 per cent, despite higher transactors. 
• Festive-related campaign led to a higher cost-to-income at 56.8 per cent. Sequential improvement witnessed in asset quality as credit cost declined 60 bps to 9 per cent, gross non-performing asset/ net non-performing asset (GNPA/ NNPA) dipped 22/ 13 bps to 2.85 per cent/ 1.29 per cent.

SBI Card management guidance

• Management guided gross credit cost would trend down from current levels over the next two quarters. While an exact range was not provided, they stated that the credit cost would be below 9 per cent.
• It reiterated full-year cost-to-income guidance of 54–56 per cent and said, given strong corporate spends, the outcome is likely to be at the higher end of the range. 
• The company has reduced receivables growth guidance to 10–12 per cent from 12–14 per cent in Q1FY26, and this remains unchanged.