SBI Card Shares Surge 5% Following Upgrades from Nomura and Nuvama
SBI Card’s share price jumped 5% on Monday, January 6, 2025, following bullish upgrades from global brokerage Nomura and domestic brokerage Nuvama Institutional Equities. Both brokerages raised their target prices, fueling investor optimism.
Target Price Upgrades
- Nomura has set a target price of ₹825 for SBI Card, representing a 14% upside from the previous close of ₹723.10.
- Nuvama has raised its target price to ₹850, suggesting a 17.5% potential upside.
The positive outlook led to a strong intra-day rally, with SBI Card’s shares reaching a high of ₹760.15 on the BSE, marking a 5.12% increase.
Bullish Views from Brokerages
Nomura’s Upgrade: Nomura upgraded its rating for SBI Card to “Buy” based on several growth triggers, including improving asset quality and increased net card additions. The brokerage highlighted that concerns about asset quality are expected to subside in the near term, with credit costs forecasted to decline to 7.5%/7% by FY26/27, down from 9% in FY25. Nomura also noted a rise in net card additions in November 2024, the highest since December 2023, signaling a positive growth trend. Additionally, the brokerage sees SBI Card as a major beneficiary of potential rate cuts in FY26.
Nuvama’s Upgrade: Nuvama upgraded SBI Card to “Buy” from “Reduce” based on improving credit cost projections. The brokerage acknowledged that SBI Card has underperformed in earnings due to persistent credit cost increases and low visibility of a turnaround. However, Nuvama believes credit costs have likely peaked in Q2FY25 and will start improving by Q4FY25. While credit card delinquencies are rising for competitors, SBI Card’s earlier onset of the weak credit cycle has positioned the company to improve its risk assessment and credit cost trajectory. Nuvama also sees potential benefits from future RBI rate cuts, boosting their target price for the stock to ₹850 from ₹620.
At 11 am, SBI Card’s stock was trading 2.5% higher at ₹741.05 on the BSE.
