SBI Cards sheds 3% after Nomura lowers rating, cuts target price

Nomura has downgraded its rating on SBI Cards stock to ‘reduce’, and cut its target price to Rs 700 from Rs 1,030 per share.

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Shares of SBI Cards and Payment Services declined 3 percent on June 26 after Nomura downgraded the stock to ‘reduce’ and lowered its target price by 32 percent.

The global brokerage firm has revised the target price to Rs 700 from Rs 1,030 per share.

However, the stock came off its day’s low. At 9:24am, shares of the company were trading 1 percent lower at Rs 848.6 on the BSE.

The scrip hit 52-week high of Rs 1,028.75 and 52-week low of Rs 690.90 on August 17, 2022 and January 30, 2023. It is trading 17 percent below its 52-week high and 23 percent above its 52-week low.

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Nomura believes the payment services company’s profitability will remain under pressure, and that the credit card industry growth is moderating and along with it, the company is losing its market share.

The industry landscape is changing with an increase in riskier consumer segments, it pointed out. It also sees benefit of policy rate pause or cut on cost of funds to accrue only in FY25.

Nomura believes stretched valuation leaves no margin for error.

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