There is a lot of positivity and excitement around the upcoming initial public offering of SBI Cards and Payment Services Ltd.

The much anticipated IPO of the second-largest credit card issuer in the country, with an 18 percent market share, will hit the capital market from March 2-5.

It is piquing the interest of investors given its dominant position in the domestic credit cards market and strong parentage of State Bank of India, India’s largest commercial bank in terms of deposits, advances and number of branches.

The company is in an advantageous position to benefit from the rising trend of digital payments. Thus, investors with a longterm horizon and wanting an exposure to growing consumerism consider the IPO a good bet.

Also, it is expected to be the largest IPO for FY19-20.

The controlling shareholder, SBI, and its 24 per cent partner Carlyle Group are set to rake in over Rs 9,000 crore from the issue. While SBI is looking to sell a four percent stake in the company, the private equity firm would sell 10 per cent , via the initial share sale. According to SBI, shares will be offered in a price band of Rs 750-755. The IPO includes a fresh equity issue of Rs 500 crore and an offer for sale of 130.5 million shares. The IPO size would be over Rs 10,000 crore.

Kotak Mahindra Capital, Axis Capital, DSP Merryl Lynch, Nomura Financial Advisory, HSBC Securities and SBI Capital Markets are some of the front runners in booking the shares. The share sale, which is set to become the fifth-largest IPO in the country after Coal India, Reliance Power, GIC Re and Oil and Natural Gas Corp (ONGC), will help SBI raise funds to boost credit growth.

Growing Fast and Profitable

SBI Cards boasts of more than 9 million customers across 130 cities in India. From March- September 2019, SBI Cards reported revenue growth of 36% to ₹4,363.9 crore from a year-ago. Its profit rose 78% to ₹1,034.58 crore during the period

Growth Strategy

Its growth strategies primarily focus on, among others, increasing new card acquisitions and partnerships with retail chains and other retail outlets, capitalising on SBI’s infrastructure and largely untapped customer base, and stimulating growth in credit card transaction volumes.

Back Story

SBI Cards began operations in October 1998 as a joint venture between SBI and GE Capital. In December 2017, SBI and The Carlyle Group acquired GE Capital`s stake in the company. The credit card issuer offers Indian consumers access to a wide range of value-added payment products and services.

What lies ahead

Though IPOs aren’t guaranteed tickets to riches, the SBI cards IPO has mammoth potential despite the dark clouds in the economy. We think the IPO offers solid growth prospects and could be a great fit for your diversified portfolio. It seems well on its way to make history as the market always rewards a player who has the growth potential with high returns. It will surely be exciting to watch this space for more updates.

At a Glance
IPO Open: 02 March 2020
IPO Close: 05 March 2020
IPO Size: Approx ₹10355 Crore (Approx)
Listing on: BSE & NSE
Price Band: ₹750 – ₹755 Per Share
Face Value: ₹10 Per Equity Share
Retail Portion: 35%
Equity: 13, 71, 49, 315 Shares
Discount: ₹15 Per Shares for Employees
Basis of Allotment: 11 March 2020
Listing Date: 16 March 2020