Country’s largest lender State Bank of India is coming up with the IPO of SBI Cards opening on 2nd March, 2020. The company has fixed the price band of Rs 750-755 per share for its IPO with the face value of Rs 10 to be listed on NSE and BSE. Out of the total issue of 13,71,49,315 shares the company has reserved 18,64.669 shares for it’ employees at the discount of Rs 15, i.e. Rs 740 per share. SBI shareholders’ reservation has been pegged at Rs 755 for 1,30,52,680 shares which leaves 11,56,09,450 shares to be offered in net issue. Total issue size is od Rs 10,351.98 Cr and is closing on 5th March, 2020. It is to be noted that it will be a first IPO by any credit card issuing company in India.

SBI Cards and Payment Services Limited was incorporated in 1998 and is a subsidiary of State Bank of India. SBI is India’s largest commercial bank with maximum deposits, advances and the number of branches. SBI Cards plans to use the proceeds of the IPO for raising its capital base so that it could meet its future capital requirements. As of now SBI along with its nominees holds 68,99,27,363 Equity Shares that constitutes 74% stake in SBI Cards while the rest of the holding is with CA Rover Holdings, an affiliate of Carlyle Asia Partners IV.

As on 30th September, 2019 SBI Cards and Payment Services is the 2nd largest credit card issuer in the country with 18 percent market share in credit card business as on next to HDFC Cards that leads the market with 27% market share. As on September 2019 SBI cards had 9.4 million outstanding cards and covers 18% market share in total credit card spend. The company is expecting the number of credit cards issuance to increase at an annual growth rate of 25% per year.

SBI Cards offers a wide variety of credit cards to individuals and corporate clients that includes like rewards, lifestyle, fuel, shopping, travel, various banking partnership cards and corporate cards etc.  SBI Cards issues joint credit cards and has partnered with several leading corporates across industries like Apollo Hospitals, Air India, Etihad, BPCL, Future Group, OLA Money, IRCTC, Yatra and amongst others.

Being a subsidiary of State Bank of India, SBI Cards has access to SBI’s vast network of 22,007 branches across India. This partnership helps it to market its cards to SBI’s 436.4 million mass customer base.
Headquartered in New Delhi, as of September 30, 2019, the company has a sales force of 33,086 outsourced sales personnel operating out of 133 Indian cities.

Between FY 2017 to 2019 SBI card’s total income increased at a CAGR of 44.9% while the operating revenues increased at a CAGR of 44.6%. The net profit grew at a CAGR of 52.1% during the same period.

Income Model

SBI Cards generates three types of income:

Non-interest Income – Non-interest income is primarily earned from fee-based income such as late fees, interchange fees and annual fees etc.

Interest Income – Interest Income is earned from the interest charged on credit card loans.

MDR (Merchant Discount Rate) – MDR is the fees that a credit card company charges from the merchants for providing the facility of payment by the customer through credit card to the merchant at the time of buying product or services.

Financials of SBI Card IPO: (Fig. in Cr.)

Year Revenue EBITDA OPM PAT NPM Shares EPS
2017 3471 1122 32% 371 11% 78.5 4.7
2018 5370 1665 31% 600 11% 78.5 7.6
2019 7286 2444 34% 859 12% 83.72 10.3

SBI Card IPO Snapshot

Issue Open March 2, 2020 – March 5 2020
Issue Type Book Built Issue IPO
Issue Size 13,71,49,315 Equity Shares of ?10
(aggregating up to ?10,351.96 Cr)
Face Value ?10 Per Equity Share
Issue Price ?750 to ?755 Per Equity Share (Discount of ?15 for SBI employees)
Market Lot 19 Shares
Min Order Quantity 19 Shares
Listing At BSE, NSE
Market Cap (? Cr.)
Date for Finalisation of Basis of Allotment Mar 10, 2020
Date for Initiation of Refunds Mar 11, 2020
Date for Credit of Shares to Demat Acct Mar 12, 2020
IPO Shares Listing Date March 13, 2020

The book running lead managers to the issue are Axis Capital, Kotak Mahindra Capital Company, HSBC Securities and Capital Markets (India), DSP Merrill Lynch, Nomura Financial Advisory and Securities (India) and SBI Capital Markets.

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