SBI Card Soars 6% as Macquarie Upgrades to ‘Outperform,’ Raises Target to ₹1,000

SBI Card shares surged 6% to a 52-week high after Macquarie upgraded the stock to ‘Outperform’ and raised the target price from ₹735 to ₹1,000. The brokerage cited stabilizing credit costs, improving borrower selection, and macroeconomic tailwinds like falling interest rates and easing liquidity. Despite lowering earnings estimates for FY25-27, Macquarie expects higher margins and return on assets (RoA), driving optimism for future growth.

 

CONTENTS:

• SBI Card Shares Surge as Macquarie Upgrades Rating, Raises Price Target by 36%
• SBI Cards Shares Surge 6% as Macquarie Upgrades to ‘Outperform,’ Sees 22% Upside
• Macquarie Upgrades SBI Cards to ‘Outperform’; Stock Hits 52-Week High, Gains 5% on BSE

SBI Card Soars 6% as Macquarie Upgrades to ‘Outperform,’ Raises Target to ₹1,000

SBI Card Shares Surge as Macquarie Upgrades Rating, Raises Price Target by 36%

Shares of SBI Card and Payment Services Ltd. climbed as much as 6% on Thursday, February 13, reaching a 52-week high of ₹867.20 after global brokerage firm Macquarie upgraded the stock from ‘Neutral’ to ‘Outperform.’

Macquarie also significantly raised its target price for SBI Card, increasing it from ₹735 to ₹1,000 per share—indicating a potential 22% upside from Wednesday’s closing price.

According to the brokerage, credit card slippages appear to be stabilizing, and credit costs are expected to decrease substantially over the next two quarters. Additional factors supporting the stock’s outlook include declining interest rates, improving liquidity conditions, and a softer regulatory approach by the Reserve Bank of India towards unsecured loans.

Despite this optimistic stance, Macquarie has adjusted its earnings projections for FY25-27 downward by 13-15%, citing subdued growth in loans, net interest income (NII), and fees. However, the firm revised its long-term credit cost estimates lower, which led to an increase in its sustainable return on assets (ROA) forecast by 30 basis points to 4.5%.

SBI Card recently reported a 30% year-on-year decline in net profit for the December quarter, falling to ₹383.2 crore from ₹549 crore in Q3 FY24. Revenue remained stable at ₹4,767 crore, while net interest income (NII) dipped 3.5% to ₹3,790.1 crore.

The company’s asset quality showed slight improvement, with gross non-performing assets (NPAs) easing to 3.24% from 3.27% in the previous quarter. Net NPAs saw a minor decrease to 1.18%, while the provision coverage ratio edged lower to 64.3% from 64.4% sequentially.

As of Thursday, SBI Card shares were trading 5.46% higher at ₹861.00, marking a 27% gain for the year so far.

 

SBI Cards Shares Surge 6% as Macquarie Upgrades to ‘Outperform,’ Sees 22% Upside

Shares of SBI Cards & Payment Services climbed 6% to ₹866 on February 13, marking a second consecutive session of gains. The rally followed an upgrade from Macquarie to ‘Outperform,’ with the brokerage firm setting a new target price of ₹1,000, implying a potential 22.5% upside from the last close of ₹816 on the National Stock Exchange (NSE).

 

Key Drivers Behind the Upgrade

Macquarie expects credit costs to decline significantly over the next two quarters, supported by:

• Falling interest rates
• Improved liquidity
• Potential tax cuts
• A more accommodative stance by the RBI on unsecured loans

Despite this positive outlook, the brokerage lowered its earnings estimates for FY25-27 by 13-15%, factoring in slower loan growth, net interest income (NII), and fees. However, due to a reduction in sustainable credit costs, the return on assets (ROA) projection was raised by 30 basis points to 4.5%.

 

SBI Cards’ Q3 Financial Performance

In Q3 FY24, SBI Cards reported a 30% year-on-year decline in net profit, which dropped to ₹383.2 crore from ₹549.1 crore in the same period last year.

• Revenue from operations: ₹4,767 crore (1% YoY increase)
• Net Interest Income (NII): ₹3,790.1 crore (3.5% decline YoY)

 

Asset Quality Trends

The company’s asset quality showed slight improvement:

• Gross NPAs eased to 3.24% from 3.27% in the previous quarter.
• Net NPAs remained stable, dipping slightly to 1.18% from 1.19%.
• Provision coverage ratio declined marginally to 64.3% from 64.4%.

 

Stock Performance

As of 10:30 AM on February 13, SBI Cards’ shares were trading at ₹859, up 5.2% from the previous close. Since the beginning of 2025, the stock has gained 23%.

 

Macquarie Upgrades SBI Cards to ‘Outperform’; Stock Hits 52-Week High, Gains 5% on BSE

Shares of SBI Cards & Payment Services surged 6.1% intraday on February 13, 2025, reaching a 52-week high of ₹866.85—the highest level in 18 months. The stock eventually settled at ₹859.45, up 5.23%, even as the BSE Sensex closed 32 points lower.

 

Macquarie’s Upgrade & Target Price Increase

Macquarie upgraded SBI Cards from ‘Neutral’ to ‘Outperform’ and raised its target price from ₹735 to ₹1,000, citing several industry-wide factors driving optimism:

• Overdue credit card payments are stabilizing.
• Vintage delinquencies are declining, reflecting improved borrower selection.
• Falling interest rates, improved liquidity, and potential income tax cuts are expected to benefit the company.
• RBI’s moderate stance on unsecured loans could support growth.

The brokerage lowered its sustainable credit costs and raised return on assets (RoA) by 30 basis points to 4.5%. Additionally, it reduced the cost of equity by 100bps to 13.5% and increased the price-to-book valuation multiple from 3.4x to 4.8x.

 

SBI Cards’ Market Position & Growth Prospects

• SBI Cards, a subsidiary of State Bank of India (SBI), is India’s second-largest credit card issuer with an 18% market share.
• The company relies heavily on SBI’s customer base, with over 70% of cardholders from non-Tier-1 cities and under 45 years old.
• Analysts expect a decline in slippages and credit costs from Q4FY25 onwards, along with higher margins due to lower funding costs, which could lead to a stock re-rating.

 

Other Brokerage Views

In January 2025, UBS upgraded SBI Cards to ‘Neutral’ from ‘Sell’, citing improving delinquency trends and better underwriting.

• UBS raised its price target to ₹800 from ₹600, expecting higher return on assets (RoA) and return on equity (RoE).
• UBS projects credit costs to decline from 8.4% in FY25 to 7.3% in FY26 and 7.1% in FY27.
• Net Interest Margins (NIMs) are anticipated to increase from 11.2% to 11.8% by FY27 due to a higher share of revolver loans (credit card balances not paid in full).

 

Macquarie’s credit cost estimates for FY26 and FY27 stand at 7.6%, still higher than pre-Covid levels of 6.6% and post-Covid recovery levels of 6.8%. Despite trimming earnings forecasts for FY25-27 by 13-15% due to slower loan growth, net interest income, and fees, the positive macroeconomic factors outweigh near-term risks.

 

Stock Outlook

At ₹859.45, SBI Cards’ stock has gained 23% since the start of 2025. Analysts believe the company’s strong fundamentals and improving credit conditions could drive further upside toward Macquarie’s ₹1,000 target.