SBI Cards & Payment Services Ltd. - IPO
Company Background
SBI Cards is the 2nd largest credit card issuer in India, with 18.1% market share in terms of the number of credit cards outstanding as of November 30, 2019.
SBI Cards offers various types of credit cards considering the need of retail clients (viz. Lifestyle Cards, Rewards, Shopping, Travel and Fuel).
It also offers corporate cards and is the largest co-brand credit card issuer in India. It also issues a card in partnership with smaller or regional banks.
Investment Rationale
Immense growth potential is given extremely low penetration and large untapped SBI customers:
(i) Significantly underpenetrated Indian credit card market; number of credit cards per 100 people is 3, whereas in developed/developing countries it is >30.
(ii) As on Q3FY2020, credit card to debit card ratio was 3.7% for SBI Cards (vs. peers viz. HDFC Bank - 45%, Axis Bank - 28% and ICICI Bank - 18%), which clearly indicates huge scope for mining SBI Bank customers.
Healthy return ratios; Stable asset quality despite strong advances growth:
SBI Cards has reported average ROE/ROA of 29%/4.3% over the last 3 years. Advances grew at CAGR of 34% over FY2017-19; however asset quality remained stable in the range of 2.3-2.4%.
Outlook & Valuation:
At the upper end of the price band, SBI Cards is valued at 45.5X of 9MFY2020 annualised earnings.
Although the valuations are a bit on the higher side, we are positive on the future outlook of the company given favourable industry scenario, large untapped SBI Bank customers and strong financial track record.
Initial Public Offering (IPO)
SBI Cards and Payment Services Ltd.
Initial Public Offering (IPO) of SBI Cards and Payment Services Ltd. will open for subscription on March 2.
The price range has been fixed at ₹750-755 per share.
The lot size of SBI Cards IPO, or the minimum number of shares to be subscribed, has been fixed at 19 shares.
SBI Cards IPO will close on March 5.
SBI Cards shares are expected to be listed on BSE & NSE on March 16.
Link Intime India Private Limited is the registrar to the offer.
SBI Cards will offer up to about 13 crore equity shares through an offer-for-sale route.
This will include up to 37,293,371 share sale by SBI and up to 93,233,427 shares on offer by Carlyle Group.
In addition, the company will also issue fresh equity shares of ₹500 crores.
SBI holds 76% in SBI Cards and the rest of the stake is held by Carlyle Group.
SBI Cards is the second-largest credit card issuer in India with an 18% market share.
SBI Cards was launched in October 1998 by SBI and GE Capital.
In December 2017, State Bank of India and the Carlyle Group acquired GE Capital's stake in the company.
Second largest credit card issuer in India with a strong track record of growth and profitability.
Bank of America Securities, Axis Capital, Kotak Investment Banking, HSBC and Nomura are the financial institutions advising SBI Cards on the IPO.
Company Promoters: The promoter of the Company is SBI.
Objects of the Issue: The Offer comprises of a Fresh Issue and an Offer for Sale
The Offer for Sale
The object of the Offer for Sale is to allow the Selling Shareholders to sell an aggregate of Equity Shares held by them.
The company will not receive any proceeds from the Offer for Sale.
Fresh Issue
The net proceeds of the Fresh Issue, i.e. Gross proceeds of the Fresh Issue less the Offer Expenses apportioned to the Company ("Net Proceeds") are proposed to be utilized for augmenting the capital base to meet company's future capital requirements.
SBI Cards IPO Details
IPO Date Mar 2, 2020 - Mar 5, 2020
Issue Type Book Built Issue IPO
Issue Size 137,149,315 Eq Shares of ₹10 (aggregating up to ₹10,354.77 Cr)
Fresh Issue 6,622,517 Eq Shares of ₹10 (aggregating up to ₹500.00 Cr)
Offer for Sale 130,526,798 Eq Shares of ₹10 (aggregating up to ₹9,854.77 Cr)
Face Value ₹10 Per Equity Share
IPO Price ₹750 to ₹755 Per Equity Share
Employee Discount ₹75
Market Lot 19 Shares
Min Order Quantity 19 Shares
Listing At BSE, NSE
SBI Cards IPO Tentative Date / Timetable
Bid/Offer Opens On Mar 2, 2020
Bid/Offer Closes On Mar 5, 2020
Finalisation of Basis of Allotment Mar 11, 2020
Initiation of Refunds Mar 12, 2020
The credit of Shares to Demat Acct Mar 13, 2020
IPO Shares Listing Date Mar 16, 2020
SBI Cards IPO Lot Size and Price (Retail)
Minimum 1 Lot of 19 Shares of Amount ₹14,345
Maximum 13 Lots of 247 Shares of Amount ₹186,485
SBI Cards IPO Promoter Holding Pre Issue Share Holding is 74%
SBI Shareholders Reservation in SBI Cards IPO
Investors who hold SBI shares on the 18th Feb 2020 (the date of filing RHP with SEBI) are eligible to apply under the shareholder's category of SBI Cards IPO.
As per RHP, the SBI shareholders can apply above Rs 2 lakh and maximum up to reserved portion for the SH category.
SBI shareholders (bidding up to ₹2 lakhs) can also apply under the retail category.
Further, if an SBI shareholder is also an SBI employee, he/she is also eligible to apply in all the three categories- RII (up to ₹2 lakhs), Shareholder (up to ₹2 lakhs) and Employees (up to ₹5 lakhs).
SBI Employees Reservation in SBI Cards IPO
Full-time or permanent employees of SBI (as on RHP filing date) can apply in the SBI Employees category of SBI Cards IPO.
The maximum limit defined to apply in the Employee category is ₹5 lakhs.
The maximum allotment to employees cannot be above ₹2 lakhs when the category is fully or oversubscribed.
In case of under-subscription in the employee category, the unsubscribed portion will be available for allocation, proportionately to all Eligible Employees who Bid above ₹2 lakhs, subject to maximum limit not exceeding ₹5 lakhs.
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