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A Note on SBI Card IPO

Two #trending topics relating to stock markets are SBI Card IPO and the sell-off due to Coronavirus.

#SBICard

At the end of day 2, the IPO is 80% subscribed and the retail portion is fully subscribed. (source)

The IPO is priced at Rs 755 at the upper band and the company plans to raise around 10,000 crore rupees. Grey market premium stands at Rs 180 – Rs 190 (in premiums) apiece. Earlier estimates suggested Rs 400 in premium per share. Coronavirus fear has got the market sentiments down.

Looking at the P/E ratio one can say that the IPO is very highly valued. The P/E stands over ~45.

Some facts about SBI Card –

  • The company is the second-largest in India in terms of market share. The first place is held by HDFC bank/ Cards.
  • Current market share 18%
  • Revenue – Rs 7,240.1 crore (FY 19 – nine-month period, till Dec 19)
  • Net Profit – Rs 1,161.2 crore (FY 19 – nine-month period, till Dec 19)
  • Credit card spends have registered robust growth, growing at a CAGR of 32 percent from fiscal 2015 to fiscal 2019 to reach Rs 6 lakh crore as of fiscal 2019, and is expected to grow at a healthy rate to reach Rs 15 lakh crore as of fiscal 2024, according to CRISIL.

img source – DHRP

img source – chittorgarh.com

Most of my reading suggests a mixed review of the IPO.

Here is an interesting thread on twitter I came across earlier today regarding the IPO. – LINK

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