SBI Cards Share Price Falls Over 6% After Q1 Profit Dips
The stock market can be unforgiving, and SBI Cards and Payment Services Ltd. is the latest example. The company’s shares fell over 6% on Monday after a decline in net profit in the first quarter of the current fiscal.
In a market update, the company’s bottom line fell 6.5% to Rs 556 crore in the June quarter, compared to Rs 594 crore in the year-ago period. This decline was largely due to a rise in provision expense, which rose 23% year-on-year and 9% sequentially to Rs 1,351 crore.
A Closer Look at the Financials
While the decline in net profit may seem alarming, it’s essential to dig deeper into the financials to understand the underlying story. Asset quality ratios, for instance, were stable. Gross NPA was 3.07% compared to 3.08% in the previous quarter. Net NPA was flat at 1.42%.
Spends soared 21% to Rs 93,244 crore, supported by continued revival in corporate spends and some pickup in retail spends. Receivables rose 7% to Rs 56,607 crore.
What’s Next for SBI Cards?
The results came on Sunday, July 27, and the impact was immediate. SBI Cards’ share price declined 6.6% intraday to Rs 830 apiece. The scrip was trading 5.7% lower by 2:10 p.m. The benchmark NSE Nifty 50 was down 0.6%. The total traded volume so far in the day stood at 1.9 times its 30-day average. The relative strength index was at 41.
The stock has risen 26% in the last 12 months and 16% on a year-to-date basis. While this may seem like a decent performance, it’s essential to consider the analyst consensus. Seven out of the 29 analysts tracking SBI Cards have a ‘buy’ rating on the stock, 10 recommend a ‘hold,’ and 12 suggest a ‘sell,’ according to Bloomberg data. The average 12-month analyst price target of Rs 880 implies a potential upside of 5%.
Conclusion
The decline in SBI Cards’ share price may have been sharp, but it’s essential to keep things in perspective. The company’s financials are stable, and the asset quality ratios are under control. While the provision expense may have risen, it’s not a cause for concern. As investors, it’s essential to stay informed and adapt to changing market conditions. Stay ahead of the curve with our latest news and analysis on the Indian stock markets.
