SBI Cards IPO Review

SBI Cards IPO is one of the most hyped in recent times. The mega-success of IRCTC is likely to make the IPO of SBI Cards – the most subscribed one in recent times.

Most people applying for the IPO are looking for listing gains, but the asking price of the IPO is on the higher side (46x price to earning).


  • IPO Date – March 2 to March 5 2020
  • Number of shares on offer – 13.71 crore
  • Face Value – ₹ 10 per share
  • IPO Price – ₹ 750 to 755 (make sure you bid at 755)
  • Retail Minimum – 1 lot of 19 shares (₹ 14,345)
  • Retail Maximum – 13 lots of 19 shares each (₹ 1,86,485)
  • Employee discount – ₹ 75 per share (SBI employees)
  • Listing Date – March 16 2020

Why do people use credit card?

These days people don’t carry cash when they go shopping. Many prefer swiping cards, but to use debit cards you need to have money in your account.

Paying by credit card gives you upto 50 days of interest-free loan. You can spend now and pay later. Convenient, isn’t it?

Credit card users also get rewards points and additional discount offers both at local stores and online shopping sites like Amazon and Flipkart.

How Credit Card companies make money?

When you swipe your card at a shop, the credit card company charges 1-2% as transaction fees from the shopkeeper. For example, you visit PVR Cinemas and buy tickets worth ₹ 1000 using your SBI credit card. The company will earn around 10-20 rupees from your transaction.

Credit Card companies also earn revenue from the following:

  • Late Payment Fees – If payments are not made on time, the charges levied are heavy.
  • Interest – If credit card user opts to pay in instalments, high rate of interest is charged.
  • Annual Card Charges.

Biggest Competitive Advantage for SBI Cards

The parent company SBI has 24,000 branches across India. Its subsidiary SBI Cards has access to the massive network, which it uses to get more credit card customers.

It’s currently the second biggest credit card company in India, behind HDFC Bank.

Future Growth Prospects for SBI Cards

  • Currently, 4.9 crore credit cards have been issued in India (An individual can have more than one card)
  • The population of the country is 135 crore, out of which around 90 crore people have bank accounts. In the next 10-15 years, assuming 10% of the population is eligible for credit cards – we could have more than 20 crore credit cards issued.
  • To add to it, the number of transactions and amount spent through credit cards is increasing every year.
SBI Cards IPO Review 1
Source: Red Herring Prospectus of SBI Cards

As you can clearly see from the image above – 100 people hold 320 cards in United States, whereas in India the number is 3 out of 100 people.

The potential for future growth is huge.

But the risk also lies in the potential. Investors need to closely track the NPAs. If NPA rises significantly – especially during economic downturns and recessions – the company, much like the parent bank itself, could be in trouble.

The chances of an IRCTC like listing (doubled in value) is very low. The IPO price itself puts the market capitalisation of SBI Cards above ₹ 70,000 crore.

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