SBI Card IPO: The Securities and Exchange Board of India (SEBI) on 11th February 2020 gave its in-principle approval for the SBI Card IPO (initial public offering). SBI Card IPO tentative date is most probably in the first week of March 2020. SBI Cards and Payment Services, a subsidiary of the country’s largest lender State Bank of India is expecting to raise Rs 600 crore from the SBI Card IPO. Banking heavily upon the SBI — India’s largest commercial bank and promoter of SBI Card — the IPO is expected to outperform other IPOs’ performances in the recent past, says stock market experts.
Stock market investors who hold SBI shares on the cut-off date would be eligible to apply under the shareholder’s category of SBI Card IPO. As per SEBI norms, the maximum limit defined for the ‘retail individual shareholders to apply in shareholder category is Rs 2 lakhs. SBI shareholders (bidding up to Rs 2 lakhs) can also apply under the retail category. Further, if an SBI shareholder is also an SBI employee, he or she is also eligible to apply in all the three categories — RII (up to Rs 2 lakhs), Shareholder (up to Rs 2 lakhs) and Employees (up to Rs 5 lakhs).
Giving an idea as to how an investor can benefit to the maximum from this SBI Card IPO; Anand Dama, Research Analyst at Emkay Global said, “SBI Cards is likely to be valued at around Rs 600bn in the IPO, implying premium valuations post-money (PE of 41x based on H1FY20 annualized EPS) against its developed or developing economy peers that are trading around 9-18x PE. For SBI bank, the SBI Cards IPO at this valuation would imply a value of Rs 417bn/Rs37 per share (post discount), which is higher than our and Street’s estimate, adding around Rs 15 to our target price for SBI (Rs 350).”
However, apart from the strategy that an investor should adopt when the SBI Card IPO becomes available for subscription, there are some more details that an investor should know, especially how does the SBI’s brand name is going to support the SBI Card IPO and its investors.
Speaking on the SBI impact on SBI Card IPO success Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal said, “SBI currently holds (along with its nominees) 689,927,363 Equity Shares, constituting to 74 percent of the pre-Offer issued, subscribed and paid-up Equity Share capital of the Company.” Taparia said that as a subsidiary of SBI, the company has access to SBI’s extensive network of 22,007 branches across India. The partnership enables it to market its cards to a huge customer base of 436.4 million customers.
SBI Card offer for sale is 130,526,798 Equity Shares of Rs 10.
(With inputs from zeebiz)