Subscribe SBI CARDS IPO or not ?

Few things on SBI CARDS IPO to help you decide whether to go ahead with subscribing for IPO or not.

Strength/Oppurtunities

Healthy Balance sheet

Strong parentage backup (subsidiary of SBI)

Second largest credit card issuer in India with 18%

Low credit card penetration in India ( @ 3% only) . Developed markets have this ratio @300%

Largest co-brand credit card issuer, having partnerships with several major players.

Will become the only listed company in India in this space.

Weakness/Threats

Fast usage of UPI interfaces may led to increased competition

Fast usage of mobile wallets may led to decline of credit card users or slow penetration into new user base

Unsecured credit may lead to high NPA

High Valuations

Subscribe or not?

One can subscribe to SBI cards IPO if one can hold the shares for 3 to 5 years and looking for long term gains

Things to watch out for in coming years to stay invested or move out

Slowing economy may led to lot of defaults. NPA % is sure thing to watch out for

Rich Valuations at IPO time may take longer time to deliver mutlibagger returns and if any quarter results are not as good as expected, these rich valuations may play havoc

Emergence of new player to snatch market share. Keep watch out for AXIS Bank and ICICI Bank market share vs SBI Cards market share

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