BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
The Reserve Bank of India proposed to issue a discussion paper in the next one month to cover aspects related to charges involved in various digital payment modes covering credit cards, debit cards, prepaid payment instruments, unified payments interfaces, etc. This is with the intent to make digital transactions affordable to users and economically viable to providers.
SBI Cards and Payment Services Ltd. has corrected ~9% over the past two days on fears of a reduction in merchant discount rate charges, which can adversely impact profitability.
SBI Cards’ spend-based fee constitutes 45-54% of total fees and corresponds to 18-23% of total revenue.
As per our sensitivity analysis, we estimate 8-17% earnings impact in case merchant discount rate on credit cards is reduced by 10-20%.
As the company mitigates this impact by effecting a reduction in payment processing charges, cost of reward points and the interest free payment period to customers, the earnings hit could be shielded by 5-12%.
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