Global brokerage firm Bernstein has retained its 'Underperform' rating on SBI Cards and Payment Services Ltd. while slashing its price target to ₹430 from ₹610, according to reports from CNBC TV18. The revised target implies a downside of around 34% from Thursday's closing level of ₹647.50. The stock had settled 3.82% higher at ₹647.50 on Thursday but remains down around 25% so far in 2026. As per Informist Media, SBI Cards was among the worst performers in the Nifty 200, falling over 2% alongside REC and Power Finance Corp.
As reported by Bernstein, the revolver-led credit card model is undergoing a structural disruption, with little evidence that the pressure is easing or reversing. As a pure-play credit card issuer, SBI Cards has borne the brunt of this shift, according to the brokerage. The decline in the revolvers-to-spends ratio from 7% in 2019 to 2.8% in Q1FY27 has resulted in a sharp reduction in profit generated per unit of spends, as noted by Bernstein. According to Informist Media, the structural challenges facing the credit card industry are expected to persist, impacting the company's traditional business model.
According to Bernstein's analysis, the decline in the revolvers has not been offset by growth in EMI loans, as the EMI balances-to-spends ratio has also declined. While SBI Cards has partly mitigated the impact on earnings through lower operating expenses, this is now beginning to weigh on the fees/non-interest income-to-spends ratio. The brokerage has consequently cut its earnings-per-share (EPS) estimates and now expects them to be 19% and 28% below consensus estimates for FY28E and FY29E, respectively. As per Informist Media, the sectoral indices showed mixed performance with Nifty IT rising over 1% to be the top performer, while Nifty Oil & Gas was the worst hit, down 0.3%.
As reported by CNBC TV18, SBI Cards and Payment Services shares are expected to be in focus on Friday, August 21, following the analyst downgrade. Bernstein continues to see downside risks from a further decline in the revolvers-to-spends ratio, which could keep net interest margins (NIMs) and earnings growth under pressure despite an improvement in credit costs. The structural challenges facing the credit card industry are expected to persist, impacting the company's traditional business model. According to Informist Media, SBI Cards was among the top gainers in the Nifty 200 on Thursday, rising over 4% alongside Muthoot Finance and Multi Commodity Exchange, while REC and Power Finance Corp. were the worst hit stocks, falling over 2%.
