- January 1, 2020
- Posted by: Umesh Paliwal
- Categories: Blog, Featured
(i) What is SBI Card IPO?
SBI Card IPO means the company is coming up with an IPO of SBI Credit card. SBI Credit card is the second-largest Credit card issuer in the country after HDFC.
(ii) When SBI Card IPO is coming?
Most probably, the IPO will hit the primary market in the month of Jan 2020.
(iii) How is SBI Card IPO related to SBI?
SBI Card is the subsidiary of the SBI. When any company holds more than 50% shares, it becomes its subsidiary.
(iv) Why SBI Card is coming up with an IPO?
It is coming up with an IPO to give partial exit to investors i.e. Carlyle who has invested in the company in 2017 when SBI Card had a valuation of Rs.8000 Cr. Mostly, IPO route across the globe is used to give exit to big investors or to raise funds for the company.
(v) Is there any shareholding quota in SBI Card IPO for SBI?
Yes, SBI shareholders will get shareholders’ quota advantage in the SBI Card IPO.
(vi) What are the size of the SBI Card IPO and the size of the shareholder quota?
The approximate size of SBI Card IPO would be Rs.9000 Crores. Generally, 10% of the total size is reserved for shareholder quota; it implies that around Rs.900 Crores will be reserved for shareholders. This means chances of getting firm allotment in SBI Card IPO for a shareholder of SBI is high. So everyone should buy one share for SBI in his/her Demat account to get the advantage. If you don’t have Demat account, please open one with us. The more detail can be accessed at SBI Card IPO Details
(vii) How SBI Card earn revenue?
Revenue model – interest income (63%), Fee income (17%) rest is MDR (merchant discount rate).
Interest Income: Whenever we buy the item on EMI from credit cards, we pay interest on EMI. This interest income is the biggest contributor to the revenue of the SBI Card.
Fee-Income: It is a fact that 48% of every 100 spent from a credit card is not settled in due date. So, if you don’t pay your credit card bill on time, you are bound to pay late fees, which is another source of income for SBI Card IPO.
MDR: When you buy an item from shops via credit card, the shopkeeper charges 2-3% extra which is called MDR charges, which is another source of income for SBI Card IPO.
(viii) How SBI Card IPO has performed in terms of revenue in the last 3 years?
Revenue from operations has increased from ₹3346 Crores in fiscal 2017 to ₹6999 Crores in fiscal 2019 at a CAGR of 44.6%. The company has performed excellently in the last 3 years.
(ix) What is the EPS of the SBI Card IPO?
For the first 6M of FY20, the SBI Card IPO has clocked an EPS of 7.79. So, if we annualize it, then it can clock an EPS of 15 for the full year.
(x) What is the current valuation of the SBI Card IPO?
The market is expected that SBI Valuation would be somewhere around 55000 Crores. So, if we divide with no. of outstanding shares as on 30.09.2019, the price comes around Rs. 590 per share.
This is a portfolio stock and may give good listing gain depending upon the pricing. To grab this opportunity with both hands, try to open as many as Demat account as possible. If you don’t have one, then you can visit the below link and open the Angel Broking account with us.