Apply 1
Avoid 0

Overview of SBI Card

(a) They are the second-largest credit card issuer in India, with an 18.0% market share of the Indian credit card market in terms of the number of credit cards outstanding as of September 30, 2019. SBI Card is a subsidiary of State Bank of India.

(b) They offer an extensive credit card portfolio to individual cardholders and corporate clients which includes lifestyle, rewards, travel and fuel, shopping, banking partnership cards and corporate cards covering all major cardholder segments in terms of income profiles and lifestyles.

(c) SBI Card has a broad credit card portfolio that includes SBI Card-branded credit cards as well as co-branded credit cards that bear both the SBI Card brand and our co-brand partners’ brands.

It offers four primary SBI Cardbranded credit cards: SimplySave, SimplyClick, Prime and Elite, each catering to a varying set of cardholder needs.

It is also the largest co-brand credit card issuer in India according to the CRISIL Report, and have partnerships with several major players in the travel, fuel, fashion, healthcare and mobility industries, including Air India, Apollo Hospitals, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money and Yatra, among others.

(d) It has a sales force of 33,086 outsourced sales personnel as of September 30, 2019, operating out of 133 Indian cities. Had a presence in 3,009 open market points of sale across India as of September 30, 2019.

In addition, its partnership with SBI provides access to SBI’s extensive network of 22,007 branches across India, which enables it to market credit cards to SBI’s vast customer base of 43.6 Crores customers as of March 31, 2019.

Revenue Model

They generate three types of income:

(a) Non-interest income (primarily comprised of fee-based income such as interchange fees, late fees, and annual fees, among others)

(b) Interest income on credit card loans.

(c) MDR( Merchant Discount Rate)- The fees credit card company charges from the merchant for providing a facility to pay when a customer buys the product from the shop. Here, three business comes into the picture.

Credit Card Company ( 1st Business) charges a 2-3% MDR fee from the merchant to facilitate the buying option for customers. Now, the credit card company alone can’t do this transaction. It is only providing the credit facility to customers. The transfer of money from a credit card company to a merchant’s bank account is facilitated by the Network providers ( 2nd Business), such as Master Card, VISA  and payment gateways companies. Now, finally without POS Machine( 3rd Business)  both the above business is of no use. So, here comes the third business, i.e. Swap machine provider.

Here if the Credit Card company is charging Rs.100 as MDR Fees from the merchant, then 75-80% goes to Credit Card company, 20-25% to the network provider or rest to POS machine provider.

Financial Performance

(a) The total income increased from ₹3471 Crores in fiscal 2017 to ₹7286 Crores in fiscal 2019 at a CAGR of 44.9% and revenues from operations have increased from ₹3346 Crores in fiscal 2017 to ₹6999 Crores in fiscal 2019 at a CAGR of 44.6%.

(b) The net profit increased from ₹372 Crores in fiscal 2017 to ₹862 Crores in fiscal 2019 at a CAGR of 52.1%.

(c) The ROAE has remained stable at 28.5% in fiscal 2017 and 28.4% in fiscal 2019, while ROAA increased from 4.0% in fiscal 2017 to 4.8% in fiscal 2019.

InvestorZone Take:


The business of credit cards in India is at a very nascent stage. As per DRHP, our country has an urban population of approximately 45 Crores. We may assume that a credit card is used mostly by the urban population. In India, as on date, we have approximately  5 Crores credit cards, so in terms of the urban population, this is very thin.

In the e-commerce industry, only 30-35% payment is made through Credit card and the majority of the payment is done through cash on delivery model. Nowadays, these e-commerce companies are giving an option to the user to pay via debit or credit card instead of cash by providing a POS machine while delivering a product. This will also give impetus to credit card companies. Moreover, the e-commerce industry itself at the nascent stage, so the growth of the e-commerce industry will have a direct impact on the credit card business.

Millennials( age below 30 ) are using a credit card more often than our old age counterparts. India has one of the youngest populations in the world. The median age of India’s population is 28.4, which is the youngest as compared to the USA( 38.4), China(38.4), Russia(39.6) and Japan(48.4). This factor is also a driving force for credit card companies.

As we are moving towards a cashless economy, the growth of a Credit Card is inevitable.


The only risk credit card companies have is the impact on business due to the slowdown in the economy. In the slowing economy, the loss of jobs happened quite fast. Loss of job has the first casualty on Credit card payment. As these companies don’t have any other business, the risk will be more in a prolonged slowdown.

Objects of the SBI Card IPO:

a) The Offer for Sale: The object of the Offer for Sale is to allow the Selling Shareholders to sell an aggregate value up to Rs.8000 Crores of shares held by them. b) Fresh Issue( 500 Crores ) The net proceeds of the Fresh Issue are proposed to be utilized for augmenting the capital base to meet the future capital requirements.

SBI Card IPO Details:

Face Value: ₹ 10 Per Equity Share
Issue Size: 8500 Cr.
Lot Size: 24 Shares
Listing At: NSE,BSE

Promoters And Management:

The promoter of the Company is SBI and it currently holds (along with its nominees) 689,927,363 Equity Shares, constituting to 74.00 % of the pre-Offer issued, subscribed and paid-up Equity Share capital.

Financials of SBI Card IPO:

( Fig. in Crores )
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
InvestorZone Take: 1. SBI Card has shown tremendous growth in terms of revenue in the last 3 years. After demonetization, the demand for cash reduces which has given impetus to credit card companies. 2. SBI Card PAT has grown from Rs. 372 Crores to Rs.859 Crores in the last 3 years. 3. The company has ROE( Return on Equity ) of 25%, 25% and 23% in FY16-17. 17-18 and 18-19, which is excellent.

Comparison With Peers:

There is no listed peer in the market.

Recommendation on SBI Card IPO:

to be updated shortly

Registrar of SBI Card IPO:

  1. Link Intime India Private Limited

Discussion on SBI Card IPO:

    In credit card Industry, the customers are classified into three categories:

    1. Revolvers- It is the one who does big-ticket size spending and later on converts the dues into EMIs. Now, we all know the credit card companies charge hefty interest rates, so, revolvers are basically the most profitable customers for credit card companies.

    2. Transactors- A transactor is a consumer who pays their credit card balance in full and on time every month. Transactors do not carry a balance from month to month; they always pay their credit card bills in full by the due date. Transactors do not pay interest or late fees.

    3. Defaulters- One who does not pay dues of credit card companies. Such customers are a loss to the credit card companies.

    Out of 100 customers, 20-25 are revolvers, <10 are defaulters, and 65-70 are transactors.

    On 18th January 2020
    GMP Rs. 247/253
    Application :Rs. 3450
    Subject to Rates : Rs. 4245

    Tentative news…
    *SBI Cards IPO*

    IPO Open: *12*-February -2020
    IPO Close: *14*-February -2020
    Price Band: *₹660 – ₹680* Per Share
    Lot Size: *22* Share
    Minimum Amount: *₹14,960*

    Latest Grey Market Premium *248-252*

    SBI Cards and Payment Services
    Open : 20-01-2020
    Close : 22-01-2020
    Price : 617 to 619
    Market Lot : 26 Shares
    Registrar : Link intime India Pvt Ltd
    Lead Manager : Axis Capital, BoA Merrill Lynch, HSBC Securities, Kotak Mahindra Capital

    On 17th January 2020
    GMP Rs. 247/253
    Application :Rs. 3430
    Subject to Rates : Rs. 4260

    As per info from BRLM, the SBI Card IPO have been deferred and most probably hit after budget.

    On 16th January 2020
    GMP Rs. 258/265
    Application :Rs. 3530
    Subject to Rates : Rs. 3260

    On 15th January 2020
    GMP Rs. 257/264
    Application :Rs. 3525
    Subject to Rates : Rs. 3250

    On 14th Jan 2020
    GMP Rs. 256/264
    Application :Rs. 3550
    Subject to Rates : Rs. 3250

      Not yet out, as per internal sources DRHP may get the final nod from SEBI shortly.

    Following are the key USPs for SBI card IPO definitely one should invest into it.

    1.Growing amount of credit culture in India.
    2.Credit card has become a lifestyle for Millennials.
    3.Profitability buys companies and post good set of numbers as company has been consistently 4.getting good amount of interest and fees based income.
    5.Compounding looks much easier and better in this type of businesses.
    .It is the business of future

    On 11th Jan 2020
    GMP Rs. 252/257
    Application :Rs. 3560
    Subject to Rates : Rs. 3240

    GMP Rs. 258/262
    Application :Rs. 3500
    Subject to Rates : Rs. 3200

    On 10 January 2020
    GMP Rs. 247/252
    Application :Rs. 3450
    Subject to Rates : Rs. 3250

    Here’s the list of 20 big IPOs that could be listed in 2020:

    1. SBI Card
    2. Eqitas Small Finance Bank
    3. HDB Financial Services
    4. Bajaj Energy
    5. PNB MetLife India
    6. UTI AMC
    7. HDFC Ergo
    8. Kotak Mahindra AMC
    9. Aditya Birla AMC
    10. Reliance Jio & Reliance Retail
    11. Axis Bank AMC
    12. L&T AMC
    13. Exide Life Insurance Company
    15. Tata Technologies
    16. Burger King
    17. Montecarlo
    18. EaseMyTrip
    19. Mazagon dock limited
    20. NSE Ltd.

    Check out the list of Top 10 IPOs in 2020.

    1. SBI Cards IPO

    2. UTI AMC IPO

    3. Burger King IPO

    4. Home First Finance IPO

    5. Equitas Small Finance Bank IPO

    6. NSE IPO

    7. IREDA IPO

    8. EaseMyTrip IPO

    9. Computer Age Management Services IPO

    10. EESL IPO

    On 09 January 2020
    GMP Rs. 242/247
    Application :Rs. 3250
    Subject to Rates : Rs. 3250

    Can we buy 1 share now and be eligible for shareholder quota
    Kindly confirm till when we can say share to get benefit like this

    Also confirm if we come under shareholder quota then
    Will I be eligible to apply 2 lots
    1 under retail
    1 under shareholder quota
    From the same account(single pan)

      yes, but it should be below 2 lac though for retail.

    I have purchased 10shares of SBI today so the shares will be credited to my Demat a/c on 09.01.2020. Shall I be entitled to apply in share holder’s reserved quota? Request to reply early.

    Hi Grey market..
    By which date sbi share buying is allowed to be in shareholder quota..??

    On 6th January 2020
    GMP Rs. 235/245
    Application :Rs. 3250
    Subject to Rates : Rs. 3250

    SBI Card IPO Grey Market Premium
    GMP 210-220
    Kostak 2200
    Subject to 3500

    if i buy 1 share of sbi bank now..thn i am eligible to apply for both category share holder nd retail? plzz suggest

    Hi market wizard.. I need to ask 2 questions to you.. I will be very thankful for your help..
    1. Can I still buy sbi share to be in shareholder quota..??
    2. Can I apply in ipo through hdfc asba net banking facality…??

    04 Jan 2020
    GMP Rs. 249/257
    Application :Rs. 3510
    Subject to Rates : Rs. 3520

    You can apply SBI Cards IPO via ASBA available in your bank account. Just go to the online bank login and apply via your bank account by selecting the SBI Cards IPO in the Invest section. The other option you can apply SBI Cards IPO via IPO forms download via NSE and BSE. Check out the SBI Cards forms – click NSE Forms & BSE Forms blank IPO forms download, fill and submit in your bank or with your broker.

    SBI Cards IPO Allotment & Listing:
    Basis of Allotment: 27-Jan-2020
    Refunds: 28-Jan-2020
    Credit to Demat Account: 29-Jan-2020
    Listing Date: 30-Jan-2020

    SBI Cards IPO Market Lot:
    Lot Size: Minimum 25 Shares & Maximum 310 Shares
    Minimum Amount: ₹14832
    Maximum Amount: ₹192816

    SBI Cards IPO Dates & Price Band: (Tentative)
    IPO Open: 20-January-2020
    IPO Close: 22-January-2020
    IPO Size: Approx ₹9500 Crore (Approx)
    Face Value: ₹10 Per Equity Share
    Price Band: ₹614 – ₹620 Per Share
    Listing on: BSE & NSE
    Retail Portion: 35%
    Equity: 130,526,798 Shares
    Discount: ₹17 Per Shares

    Upcoming IPOs in 2020
    Equitas Small Finance Bank
    Burger King India
    SBI Cards
    HDFC Fin Services
    Mazagon Dock Shipbuilders
    National Stock Exchange

    SBI Cards IPO – *Market’s Current Estimates of oversubscription*:

    RII = 30.00L Forms = 1.66X Applic. wise (Avg allotment of ~14.43 shares per lot)
    NII = 220K Crs. = ~191.85X
    SH = 155K Crs. = ~192.15X

    Interest cost *@11.00%p.a.* for 7days = 130.37paise for 1X

    Thus, for NII the costing = 191.85 X 130.37paise = Rs.250.13 per share (= GMP)

    And, for RII the costing = 14.43 X 250.13 = Rs. ~3610/- (= Kostak)

    Thus, for SH the costing = 192.15 X 130.37paise = Rs.250.51 per share (= GMP)

    SBI Cards IPO – *GMP Estimated*
    GMP 250 +/- 1
    Kostak 3600/- +/- 50

    SBI Cards IPO – *Breakeven / Justification of the current GMP*


    1) The issue size to be of *Rs.8,500 Crs*
    2) A stupendous demand for leverage, will allow the NBFCs to make hay while the sun shines, and giving them the opportunity to charge a higher rate of interest of *11%pa for 7 days*

    In that case:

    A) The NII category size will be Rs.1,147Cr and the interest cost will be *Rs.250/-* … only if NII category receives appllications worth approximately *Rs.2.20L Crs.*


    B) The SBI Shareholder category size will be Rs.807Cr. and the interest cost will be *Rs.250/-* … only if SBI Shareholder category receives appllications worth approximately *Rs.1.55L Crs.*

    To my mind these numbers look insane, and hence the current GMP of Rs.250/- beats all sense of logic from this point of view.

    However, the collective wisdom of the market is supreme. Hence, shall be interesting to watch how the Grey Market Premium moves over the next 6 weeks

    SBI Cards IPO – * Beneficiaries of the IPO proceeds*

    Fresh Issue is to Rs.500Crs. (Money to be received by SBI Cards and Payment Services)

    And the Offer for Sale is of 130,526,798 Equity Shares

    Out of which:
    A) SBI is selling 37,293,371 Equity Shares (Money to be received by SBI Bank)
    B) CA ROVER HOLDINGS is selling 93,233,427 Equity Shares (Money to be received by an entity ultimately controlled by the Carlyle group)

    So it is definitely not an IPO by the Government of India. However, please note the *largest beneficiary of the proceeds of this IPO will be an American Private Equity Fund*.

    Now give a moment to introspect, would a capitalist fund manager leave an *unreasonable* amount on the table for the IPO investors?

    on 03 Jan 2020
    GMP Rs. 231/238
    Application :Rs. 3010
    Subject to Rates : Rs. 3500

    SBI Cards IPO

    Open: 20/01/2020
    Close : 22/01/2020
    Price: ₹616 – ₹619

    Lot Size: Min. 24 Shares

    Minimum Amount: ₹14832

    Basis of Allotment: 28-Jan-2020

    Refunds: 29-Jan-2020

    Credit to Demat A/c.

    Listing Date: 30-January-2020

    The below table shows the growth of the number of a credit card( in MIllions) from FY14 to FY19.

    NAME FY-14— FY-15— FY 16—FY 17—FY 18— FY 19— Growth

    a) HDFC Bank = 5.1— 6— 7.3— 8.5— 10.7— 12.5— 19%
    b) SBI Cards = 2.9— 3.2— 3.6— 4.6— 6.3— 8.3— 24%
    c) ICICI Bank = 3.2— 3.3— 3.7— 4.3— 5— 6.6— 16%
    d) Axis Bank = 1.4— 1.7— 2.4— 3.3— 4.5— 6— 34%
    e) Citi Bank = 2.4— 2.4— 2.4— 2.5— 2.7— 2.7— 2%

    Before investing in an IPO, points like- Is it a credible company? I there long – term growth opportunity for the stock? Purpose of the IPO?. And will the stock move upwards after considering the market and the company’s present situation? Purpose of the IPO, should be considered.

    i. Now to understand whether the company is credible check who is the promoter and board members of the company and history of the company.

    ii. To understand the long-term growth look at the business modal of the company, its product/service offerings and evaluate whether these will have future demand in the market. Also analyse how it has grown in the past by going through its financial statements.

    iii. Purpose of the IPO should be very well clear before investing. Subscriber should evaluate whether the IPO is raised for developing the business or for some other purposes which won’t be in favour of the investors.

    iv. And lastly look at what valuation the stock is being issued and what is the present situation of the market. At times subdued market condition can lead to listing the stock at a lower price than its issue. This can be a problem only for investors who are interested in listing gains. For long-term investors, this is not a concern. Rather the only concern should be the first two points mentioned.

    SBI Cards IPO – Issue Information *(Tentative)*

    Issue Opens on: ?? February 2020
    Issue Closes on: ?? February 2020
    Issue Type: Book Built Issue IPO
    Issue Size: 13,82,19,105 Shares
    Face Value: Rs.10/- per Share
    Issue Price: Rs.640 – Rs.650 per Share
    Discount: Rs.10/- (for Employees)
    Market Lot: 23 Shares
    Listing At: NSE, BSE

    Equity Shares outstanding prior to the Issue = 93,23,34,278 Shares
    Employee Reservation of 18,64,669 Shares @640/- = Rs.119.34Crs
    SBI Shareholders Reservation of 1,30,52,680 Shares @650/- = Rs.848.42 Crs
    Net Offer for Sale of 11,56,09,449 @650/- = Rs.7514.61Crs
    Fresh Issue of 76,92,307 @650/- = Rs.500.00Crs
    Equity Shares outstanding after the Issue = 94,00,26,585 Shares

    Category-wise Break up:
    Anchor – 3,69,90,527 Shares = 2,404.38Crs
    QIB – 2,46,60,351 Shares = 1,602.92Crs
    NII – 1,84,95,263 Shares = 1,202.19Crs
    RII – 4,31,55,615 Shares = 2,805.11Crs (Lot size: 23 = 18,76,331 Forms)
    SBI Shareholders – 1,30,52,680 Shares = 848.42Crs
    Empl. Quota – 18,64,669 Shares = 119.34Crs (@640 per Share)
    Total Issue – 13,82,19,105 Shares = 8,982.38Crs.

    Subscription required for 1X
    RII = 18,76,331 Forms
    NII = 1202.19Crs

    Interest cost @7.50%p.a. for 7days = 93.49paise for 1X

    SBI Cards IPO – Financial Information (Basis of Valuation)

    EPS for FY16-17 >>> Rs.4.75 (Page #93 of DRHP)
    EPS for FY17-18 >>> Rs.7.40 (Page #93 of DRHP)
    EPS for FY18-19 >>> Rs.9.43 (Page #93 of DRHP)
    EPS for H119-20 >>> Rs.7.79 (Page #93 of DRHP)

    RoNW for FY16-17 >>> 26.00% (Page #94 of DRHP)
    RoNW for FY17-18 >>> 25.00% (Page #94 of DRHP)
    RoNW for FY18-19 >>> 24.00% (Page #94 of DRHP)
    RoNW for H119-20 >>> 17.00% (Page #94 of DRHP)

    NAV as on September 30, 2019 was Rs.46.99 (Page #94 of DRHP)

    Listed Industry Peer Group (Page #94 of DRHP): NONE

    SBI Cards IPO – Schedule *(Tentative)*

    15th Jan – Announcement of Price Band
    17th Jan – Anchor Investors Allotment
    20th Jan – Offer Opens
    22nd Jan – Offer Closes
    27th Jan – Finalisation of Basis of Allotment
    28th Jan – Unblocking of ASBA Accounts
    29th Jan – Credit of Equity Shares to Depository Accounts
    30th Jan – Commencement of Trading (Target is to List before Budget date)

    List of Mainboard IPOs IN THE PIPELINE
    (Status as on 20th December 2019)

    A) DRHP Filed – SEBI Approval *Awaited*:

    1) UTI Asset Management Company >>> DRHP date 18-Dec-19
    2) Rossari Biotech >>> DRHP date 18-Dec-19
    3) Equitas Small Finance Bank >>> DRHP date 16-Dec-19
    4) Easy Trip Planners >>> DRHP date 12-Dec-19
    5) Home First Finance Company India >>> DRHP date 29-Nov-19
    6) SBI Cards and Payment Services >>> DRHP date 27-Nov-19
    7) Puranik Builders >>> DRHP date 20-Nov-19
    8) Burger King India >>> DRHP date 04-Nov-19
    9) Route Mobile >>> DRHP date 30-Sep-19
    10) Mukesh Trends Lifestyle >>> DRHP date 30-Sep-19
    11) Montecarlo >>> DRHP date 27-Sep-19
    12) Chemcon Speciality Chemicals >>> DRHP date 08-Aug-19
    13) Shri Bajrang Power and Ispat >>> DRHP date 12-Sep-18

    B) SEBI Approval *Received* *(within the past 5 months)*:

    1) Mazagaon Dock Shipbuilders >>> SEBI Approval 13-Dec-19
    2) Samhi Hotels >>> SEBI Approval 29-Nov-19
    3) Indian Renewable Energy Development Agency >>> SEBI Approval 27-Sep-19
    4) Shyam Steel Industries >>> SEBI Approval 20-Sep-19
    5) Bajaj Energy >>> SEBI Approval 30-Aug-19

    C) SEBI Approval *Received* *(>5 months ago)*:

    6) Angel Broking >>> SEBI Approval 26-July-19
    7) Annai Infra Developers >>> SEBI Approval 12-July-19
    8) Satyasai Pressure Vessels >>> SEBI Approval 21-June-19
    9) Powerica >>> SEBI Approval 07-June-19
    10) Penna Cement Industries >>> SEBI Approval 31-May-19
    11) Emami Cement >>> SEBI Approval 15-May-19

    D) SEBI Approval *Received* *(>8 months ago)*:

    12) Shriram Properties >>> SEBI Approval 09-Apr-19
    13) T & T Infra >>> SEBI Approval 22-Mar-19
    14) Coldex >>> SEBI Approval 15-Mar-19
    15) Antony Waste Handling >>> SEBI Approval 08-Mar-19
    16) Senco Gold >>> SEBI Approval 06-Mar-19

    E) SEBI Approval *Received* *(>10 months ago)*:

    17) Heranba Industries >>> SEBI Approval 22-Feb-19
    18) Uniparts India >>> SEBI Approval 01-Feb-19
    19) Stove Kraft >>> SEBI Approval 23-Jan-19
    20) Chartered Speed >>> SEBI Approval 11-Jan-19
    21) Narmada Biochem >>> SEBI Approval 02-Jan-19

    Following are the key US peas for SBI card IPO definitely one should invest into it.

    1. Growing amount of credit culture in India.
    2. Credit card has become a lifestyle for Millennials.
    3. Profitability buys companies and post good set of numbers as company has been consistently
    4. getting good amount of interest and fees based income.
    5. Compounding looks much easier and better in this type of businesses.
    .It is the business of future

    SBI Cards IPO Strengths:

    2nd largest credit card issuer in India.
    Diversified customer acquisition capabilities.
    Industry expertise and a demonstrated track record of growth and profitability.
    Supported by a strong brand and preeminent Promoters.
    Diversified portfolio of credit card offerings.
    Advanced risk management and data analytics capabilities.
    Modern and scalable technology infrastructure.
    Highly experienced and professional management team.
    SBI Cards IPO Threats/Weaknesses

    Loss or reduction in the level of support received from:

    Competition from other credit card issuers and payment solutions providers.
    Company may not be successful in implementing growth strategies.

    SBI Card IPO Grey Market Premium
    GMP 235 – 237
    Kostak 3050
    Subject to 3550

    Investors who hold SBI shares on the cut-off date (the date of filing RHP with SEBI) are eligible to apply under the shareholder’s category of SBI Cards IPO. As per SEBI, the maximum limit defined for the ‘retail individual shareholders to apply in shareholder category is ₹2 lakhs. SBI shareholders (bidding up to ₹2 lakhs) can also apply under the retail category. Further, if an SBI shareholder is also an SBI employee, he/she is also eligible to apply in all the three categories- RII (up to ₹2 lakhs), Shareholder (up to ₹2 lakhs) and Employees (up to ₹5 lakhs)


    (i) Revenue model – interest income (63%), Fee income (17%) rest is MDR (merchant discount rate).

    (ii)75-80% of MDR goes to card issuer, network charges which are fixed (20-25 bps) rest to the POS machine provider.

    (iii)SBI has floated another company in a JV for POS.

    (iv)48% of every 100 spent is not settled on due date which is the card issuers income. Half of 48% is emi.


    Opex to CV Ratio (contributed value) is used as a metric globally. Formula is net (interest income + MDR + other income = contributed value) – (IT, Operations collection). Opex to CV keeps moving and there is no consistency in this number for SBI cards since the past 3 years


    (i) ROI and ROE has been very impressive.

    (ii) SBI cards has grown to no 2 in card issuance and spend per card has been very good leading to high net contribution as incremental revenue comes in without any additional cost.

    (iii) Doesn’t see any risk in MDR going away on credit card as there would not be much difference between debit and credit card. Govt wants to increase the spend on non cash transactions especially in tier 2-3 cities.

    (iv) Industry now has 50mn credit cards and 900 mn debit cards.

    (v) Credit Cardholders usually spend much higher than debit cardholders.

    (vi) Almost every cardholder started using wallets and these are limited to low ticket transactions. 90% of wallet holders use credit cards to fund the wallet. UPI and others are competing with debit cards.

    (vii) Break-even for a card issuer – whenever a product is launched in the category and expected life cycle of a card is 5-6 years. Premium cards break even in 9-10 months. 145k p.a. is the spend per card across call cards in India and it is 300k per annul in premium cards. Base level takes 18-21 months to break even. This assumes 60% active spends and 40% inactive spends. 1mn cards is when the business breaks even.

    (viii)Cost power acquisition is 2700 per customer across various channels. SBI cards has 18-20k DSAs, Banca channel helps getting customers against a one time payment and cost is lower. Private banks focusing on their bank customers only which is 60-70%.

    (ix) SBI Cards is no 1 in open market by design. Today Private banks have already has ready customers who are a good target for credit cards. SBI cards customers dont use SBI as their primary bank account and hence need to target the open market.

    (x) Doesn’t see much risk in the business most customers are service class customers of which most are government employees which will not lose jobs. Pvt. Jobs high spenders are about 35% in the portfolio. Unemployment in pvt segment can be 15% so only 5-6% of the overall portfolio can be impacted by unemployment.

    (xi) In tough times first casualty is credit cards followed by car and lastly home loans. If losses go up by 100% and spends come down which will impact the business and then it can go into losses.In India 48% of the spend is interest component and it has consciously been kept this way. In Japan there is no interest income to credit card companies. Co-brand cards help the company get the entire customer base of the co-brand partner

    (xii) SBI Cards launched a base level card an onboarded a large number of e commerce players and is a big success amongst youngsters. Avg spend per card for the portfolio- base customer will take 12 months, mid level takes a bit longer whereas a premium customer will never utilise the entire limit. Average spend in premium is 3 lakhs p.a. while limit is between 10-15 lakhs.


    (i) SBI is leading other PSUs in technology

    (ii) There will never be a challenge of acquiring customers for SBI cards and company only needs to focus on quality of customers they are aquiringOpen market leadership position remains with SBI cards along with freedom to operate

    (iii) Needs only 15-20mn customers from the existing pool of 700mn SBI customers


    Only 1 product and no fallback if something happens to the credit card business
    company has to remain relevant in co brand segment and open market to retain growth (can do this with private banks as well like KVB, IRCTC etc)

    – Prashin, Elara Sales

    @Market Wizard my Q. remains unanswered,
    please suggest tips to have higher chances of allotment in any ipo?
    thank you.

      It is a lottery system. So open 5-10 Demat accounts in the family member name and apply it from all. Rest all depend upon your luck.

        I have heard that before ipo allotment investor scrutiny is done to give allotment to investor and not to trader who is just looking for listing gain, this is done looking past behaviour of investor, so who holds shares after allotment gets higher allotment in IPO & also observed that if new dmat account open 1st time then very very very high probability of allotment
        kindly share your experiance

    I never get allotment in good ipos. I need to confirm a few things before applying this one. I have purchased one sbi share which is in my dmat account with zerodha and i have bank account with HDFC So is it mandatory to apply using Zerodha console with a upi ID? or i can apply through HDFC ASBA and give details of zerodha dmat where sbi share is held?

    I asked zerodha about this but they sent me procedure to apply using upi Id. Please tell me are my applications not getting allotment because i apply using netbanking ASBA instead of upi as told by zerodha?

    @Marketwizard, I am through with your blogs and comments in this forum, I think you have expert knowledge in case of financial market, specially in IPO

    can you pls state that the things to be considered and things to be avoid for high probability of allotment.

    I mean can you please state some techniques through which, one can increase his chances in compare to others, for higher allotment in any IPO?

    If I buy sbi share today then in that case will I be eligible for shareholder quota?

    Which data is last date to buy sbi shares and be eligible to apply from shareholder quota

    I also have question about equitas. I think equitas sfb ipo too is coming. So can equitas share be bought on Monday to be eligible for shareholder quota?


    Allotment in shareholder quota is proportionate basis unlike in Ujivan or HDFC AMC.

      From where we can check these details, kindly share information source and in HDFC AMC I have observed that whomsoever had HDFC share in their Dmat ac they got the allotment. So is that going to be same with this sbi card ipo?
      Thank you.

    I have bought one share each in all my DMAT accounts toady ( 06 december 2019). Share will come to my DMAT T+2 So will I be eligible for the shareholder quota? Please reply

    Grey market activity started.

    Tradeable rates 135/140.

    Request all IZ members, to buy 1-1 shares of State Bank of India from each Demat account to be elogible under shareholder quota.

    When Carlyle joined them back in 2017, the whole company valuation was 8000 cr.
    Now, it’s valuing at 57000 cr 😱