SBI Cards shares fall 5% in opening trade; here's why

Shares of SBI Cards & Payments Services tumbled as much as 5% amid a report that Carlyle Group will sell its entire stake in the credit card company through a block deal.

As of December 31, 2021, CA Rover Holdings, a Carlyle Group firm, held a 3.09% stake, or 2.92 crore equity shares, in the credit card issuer.

Carlyle is expected to raise as much as ₹2,558 crore by offering the shares at an indicative price band of ₹851.50 to ₹876.75 apiece, according to Bloomberg. Citigroup is the book-running manager to the offer.

At the end of the December quarter of 2021, State Bank of India held 69.47% share in SBI Cards & Payment Services, while a 30.53% stake was owned by public shareholders, including 3.09% by Carlyle Group.

Snapping two sessions gaining streak, SBI Cards shares opened lower at ₹859.80, against the previous close price of ₹876.75 on BSE. In comparison, the BSE benchmark Sensex was down 200 points at 60,409.

In the early trade so far, the stock declined as much as 4.71% to hit a low of ₹835.45 amid strong volume. As many as 50.5 lakh shares worth ₹430.6 crore changed hands in the first hour of the day's trade, compared to the two-week average volume of 0.46 lakh shares. The market capitalisation of the stock dropped to ₹79,933.9 crore.

The share price hit a 52-week high of ₹1,164.65 on September 1, 2021, while it touched a 52-week low of ₹712.35 on March 7, 2022.

The large cap stock traded higher than 20-day and 50-day moving averages, but lower than 5-day, 100-day and 200-day averages. It has fallen 1% in a week, while it gained nearly 14% in the last one month after the company declared an interim dividend for the financial year 2021-22. The stock has slumped 10% in one year and 9% since the beginning of the calendar year 2022.

The credit card arm of SBI, has recently declared an interim dividend of ₹2.50 (25%) per equity share of ₹10 each for FY22. The record date for dividend payment was March 31, 2022.

Most of the analysts have recommended a 'buy' call on SBI Card, citing its improving market position amid fast adoption of digitisation in light of the Covid-19 pandemic. HDFC Securities has given a 'buy' call to the stock with a target price of ₹1,100 over one year period.

SBI Cards is the second-largest player in the credit card business with 1.18 crore cards in force enjoying a healthy market share of 19.1% as on March 31, 2021. For the third quarter ended December 2021, the company reported a net profit of ₹386 crore, up 83.8% against the same period last year. Total revenue from operations rose 20% to ₹2,889 crore compared to ₹2,408 crore a year ago. The company saw its gross non-performing assets falling to 2.4% of gross advances, compared with 4.51% as on December 31, 2020. Net non-performing assets (NPA) too dropped to 0.83% as against 1.60% in Q3FY21.