SBI Cards - Business Growth Recovering Well; Return Ratios Robust: Motilal Oswal
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Motilal Oswal Report
We recently initiated coverage on SBI Cards and Payments Services Ltd., highlighting the structural growth story and the unique play on rising retail credit that has been offered by the company.
While the credit card base/spends has increased at 22%/31% compound annual growth rate over the past five years, credit card penetration levels remain much lower at 3.8% versus most other countries.
Credit card penetration to internal customers for the industry stands ~7% (much lower for SBI Cards at 3.8%), providing ample cross-sell opportunities.
A highly under-penetrated market, coupled with a higher thrust on digital payments, rising e-commerce, and efforts towards making the economy a cashless one provides long-term structural growth opportunities.
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