SBI Cards IPO: Why analysts suggest subscribing despite rich valuation

Siddharth Purohit of SMC Global Securities believes that given the stable RoE of 30% valuation, in terms of P/E ratio is likely to come down to 31x and 22x in FY21 and FY22, respectively from 43x.

SBI Cards and Payments Services (SBI Cards) will open its four-day initial public offer (IPO) on March 2. With a price band of Rs 750-755, the issue seeks to garner Rs 10,341 crore at the upper-end, making it India’s fourth-largest IPO – falling behind Coal India, Reliance Power, and GIC Reinsurance.

The offer comprises a fresh issue worth Rs 500 crore and an offer for sale (OFS) of up to 130,526,798 equity shares. A major chunk of the IPO will be a secondary share sale by parent State Bank of India (SBI) and private equity (PE) major Carlyle.

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