SBI Cards Initial Public Offer (IPO) Opens: Should You Subscribe?
SBI Cards and Payment Services aims to raise about Rs 10,350 crore through the IPO, including new shares worth Rs 500 crore with an offer for sale of 13.05 crore shares. Know Some important point to be noted.
SBI Cards and Payment Services' initial public offer (IPO) opens up for subscription on March 2. SBI Cards and Payment Services aims to raise about Rs 10,350 crore through the IPO, including new shares worth Rs 500 crore with an offer for sale of 13.05 crore shares.
SBI Cards holds a market share of 18% in the country. Bidding under the SBI Cards and Payment Services IPO will close on 5 March.
Important things to know about the SBI Cards Initial Public Offer (IPO):
Issue Price: It is to be noted that SBI Cards & Payment Services has fixed a price band of Rs 750-755 per equity share for bidding under the IPO.
Size: The SBI Cards IPO will comprise a fresh issue of shares worth Rs 500 crore & an offer for sale (OFS) of around 13.05 crore shares.
Offer for Sale: The OFS will comprise the sale of up to 3.73 crore shares by SBI and up to 9.32 crore shares by CA Rover Holdings, an affiliate of US-based Carlyle Group. As a part of the IPO process, SBI will divest 4% of its stake & Carlyle 10 per cent of its stake.
Company Profile: SBI Cards is the second largest credit card provider in the country with a card base of more than 90 lakh. The company has presence in over 130 cities in the country. It has a product portfolio that includes premium, classic, travel & shopping, exclusive and corporate cards.
Lot Size: Bids under the SBI Cards IPO can be made in lots of 19 shares. At the higher end of price band, one lot will cost an investor Rs 14,345. Under the IPO, 18.65 lakh shares are reserved for employees of SBI Cards, and 130.53 lakh for SBI shareholders.
Anchor Investors: SBI Cards has raised Rs 2,769 crore from 74 anchor investors, including the Singapore government, the Monetary Authority of Singapore, HDFC Mutual Fund, Government Pension Fund Global and Birla Mutual Fund.
Brokerage Views: As per Angel Broking, it is "positive on the future outlook of the company given the favourable industry scenario, large untapped SBI Bank customers and strong financial track record" although the valuations are a bit on the higher side.
Now, the question is whether you should subscribe to the offer? Read what top brokerages say-
SBI holds dominant position in the credit card market & strong parentage. Hence, it is well placed to benefit from the rising trend of digital payments and e-commerce. At the upper price band, the offer is valued at 12.6xFY20E BV (on an annualized and fully diluted basis) and 45.8xFY20E P/E. Strong growth, stable asset quality, and superior return ratios provide comfort and justify the premium valuation. Also, being the first in the segment to get listed, it can generate high investor interest. Therefore, it is recommended 'Subscribe' to the IPO.