According to Motilal Oswal's research report dated July 24, 2026, the brokerage has recommended a Neutral rating on SBI Cards with a target price of ₹700. The recommendation is based on the company's Q1FY27 performance and forward-looking projections. However, Motilal Oswal has noted that the current valuation has priced in all the positive factors, suggesting the stock may not offer significant upside potential from current levels.
As reported by Motilal Oswal, SBI Cards reported a PAT of ₹6.64 billion in Q1FY27, representing a 19.5% year-on-year growth and 9% quarter-on-quarter increase. This performance was in line with MOFSLe estimates, with the growth driven by lower provisions offsetting the impact of reduced fees. The company's Net Interest Margins (NIMs) declined by 30 basis points quarter-on-quarter to 10.8%, attributed to declining yields and an increase in cost of funds. The brokerage expects SBI Cards to report a Return on Assets (RoA) of 4.4% and Return on Equity (RoE) of 18.0% by FY28E.
According to the research report, SBI Cards maintains its NIM guidance and expects NIMs to remain stable going forward. The company's operating expenses grew by 23.4% year-on-year and 2.3% quarter-on-quarter to ₹26.2 billion, primarily driven by the implementation of the new wage code. The brokerage notes that the company largely maintains its earnings estimates for the forecast period, with the target price of ₹700 based on 18x FY28E EPS.
Despite the positive Q1FY27 results, Motilal Oswal has maintained its cautious stance on SBI Cards, citing that the current valuation has priced in all the positive factors. This suggests that the stock may not offer significant upside potential from current levels, even with the company's strong operational performance and forward-looking projections. The brokerage's Neutral rating reflects this balanced view of the company's prospects.
