SBI Cards and Payment Services Rating- buy; Robust growth in retail spends
时间:2024-06-26 07:14:56 阅读(143)
SBI Cards & Payment Services’s reported a muted Q2FY23, with net earnings dragged by higher provisions, even though PPOP growth stood in line. PAT grew 52% y-o-y to `5.3 bn (11% miss). Margin fell 90b q-o-q to 12.3% on the back of a decline in the revolver mix (24% v/s 26% in 1QFY23) and higher cost of funds. Trends in retail spends were strong at 45% y-o-y, while corporate spends witnessed a slight moderation (34%). Overall spends rose 43% y-o-y. GNPA ratio improved by 10bp q-o-q to 2.14%, while NNPA ratio was stable at 0.78%. We estimate SBICARD to deliver 41% earnings CAGR over FY22-24, leading to a RoA/RoE of 6.5%/ 28.2%. We maintain our Buy rating with a TP of `1,000.
SBICARD reported a PAT of `5.3 bn, driven by higher provisions that stood at `5.5 bn. NII grew 22% y-o-y to `11.2 bn, with margin declining by 90bp q-o-q to 12.3%. This was led by a decline in the revolver mix to 24% and higher cost of funds. Revolver mix witnessed a decline on account of higher spends in Sep’22 due to the festive season, which is likely to revolve gradually.
The share of online retail spends grew to 57.8% in 1HFY23 from 55.2% in Q1FY23 due to rapid digitisation and growing comfort as well as the convenience of shopping online.
SBICARD launched a new variant ‘Cashback SBI Card’ in Sep’22 and the same has seen strong customer interest. While the cost of funds stood at 5.4% in Q2FY23, the management expects the same to move up to 6.1-6.2% in coming quarters. However, the share of interest earning assets is likely to increase, which will offset the impact on margin.
Also read: Dabur to take digital route to launch new products
We expect the revolver mix to increase gradually as spends mature as the festive season progresses,
while margin may remain under pressure as borrowing cost increases. Growth in spends remains strong and is likely to stay healthy, thus aiding loan growth.
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- bi, Daiichi Sankyo has said that going ahead with the open offer at this stage would be “illegal”, “an abuse of process of law”, and “gross overreach” of the pending proceedings before the Delhi High Court and also in violation of the orders of the Supreme Court. The market regulator should, therefore, hear it out before taking any call on the IHH’s proposal, it said.
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
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Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.
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