The long-awaited initial public offering (IPO) SBI card Payment Services, a subsidiary of the State Bank of India (SBI), will open on March 2 and confirm with its prospectus. The company aims to raise about 90 billion rupees ($ 1.25 billion). of IPO It will be a combination of newly released products and offers (OFS). SBI card The February 18 prospectus showed that the company plans to issue 5 billion rupees of new shares and will issue up to 130.5 million shares.
About SBI Card
SBI card Launched by SBI and GE Capital in October 1998. SBI Card was established as SBI Card and Payment Services Pte Ltd (SBICPSL), headquartered in Gurgaon, Haryana. In December 2017, SBI and Carlyle Investment Group acquired GE Capital's shares in the company. At present, the SBI card holds 74% of the shares of the SBI card, and Carlyle holds 26%.
It is the second largest credit card issuer in the United States. Its share of the credit card market (number of credit cards) increased from 17.6% in March 2019 to 18.1% on November 30, 2019. In terms of total credit card spending, its share rose from 17.1% in 2018 to 19% to 17.9% in the eight months ended November 30, 2019, according to data from the Reserve Bank of India (RBI).
It is recommended that the net proceeds of the new issue be used to increase the capital base to meet future capital requirements. In addition, the company hopes to get the benefits of listing its stock on a stock exchange. Price ranges for offers and bids will be announced at least two business days before the offer start date. The bidding process will end on March 5.
Offer break up
What analysts say
According to data from Emkay Global Financial Services, the number of credit cards in the Indian credit card industry has more than doubled to 53 million in the past four years, but the penetration rate is still significantly inadequate and there is huge room for growth. Credit rating agency CRISIL estimates that the outstanding compound annual growth rate of the Indian credit card industry will increase from the current US $ 14 billion to US $ 47 billion in fiscal 24, reaching a compound annual growth rate (CAGR) of 23%, still only accounting for the current US Repayment of 6% of debt. Card debt.
Brokerage analysts Anand Dama and Rahul Malani and Neelam Bhatia stated in 2006 that SBI has the potential to expand further, leveraging Indian consumers' preference for credit cards and higher penetration among dedicated bank customers to achieve this goal. Note January 8, 2020.
Added: "It also gained a relatively high RoA (normalized in the first half of fiscal 20) of nearly 5.5% due to higher profit margins / expenses, better turnover and lower credit costs, and The benefits of lower tax rates can help return on assets), but it needs to focus on increasing operating leverage, increasing spending per card by focusing on swipe / premium customers who purchase in the open market to increase expenses and convert expenses to EMI / Term loan to stabilize its originally high profit / return on investment. "