This document summarizes details about the upcoming SBI Cards IPO, including the issue price, schedule, key strengths and risks. Some of the key points include: - The IPO will open on March 2nd and close on March 5th, with shares expected to list on March 16th. The issue price is Rs. 750-755 per share. - SBI Cards is the second largest credit card issuer in India. Its revenues have grown consistently in recent years to Rs. 7,286 crores in FY2019. - The company's key strengths include its brand, risk management capabilities, and experienced management team. Risk factors include reliance on its parent company SBI and potential credit losses

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SBI Cards IPO – Issue details, Risks and FAQs of the IPO
February 22, 2020  Suresh KP
SBI Cards IPO Review
Investors have been waiting for an SBI
Cards IPO date for a long time. This IPO
would open for subscription on 2 March,
2020. SBI Cards and Payment Services is
the subsidiary of SBI and 2 largest credit
card issuer in India that has a share of
18.1% as of December, 2019. IRCTC IPO
has created good wealth in the short term
and investors have been waiting for
similar IPOs. SBI Cards Mega IPO is
expected to be around Rs 9,000 Crores
issue size. Should you invest in the SBI Cards IPO? What are the risk factors you should
consider before investing in this SBI Cards IPO?
Also Read: Top 5 Best Small cap Funds to invest in 2020
About SBI Cards and Payment Services Limited
They are one of India’s leading providers of credit cards in India. Its operating model is
focused on catering to what they see as its card holders’ two main financial needs:
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transactional needs and short term credit. The revenue they derive from its credit card
products consists primarily of interest on its credit card receivables and non-interest
income primarily comprised of fee-based income, such as interchange fees, late fees,
annual credit card membership fees and other fees.
A typical credit card transaction begins when a card holder purchases goods or services
from a merchant using its credit card. After the transaction is authorized by the credit
card issuer through the payment network, the credit card issuer pays the purchase
amount to the payment network net of interchange fees. The payment network, in turn,
then pays the purchase amount to the acquirer. Finally, the acquirer pays the purchase
amount to the merchant net of acquirer fees.
SBI Cards IPO – Issue details
IPO opening date: 2-March-2020
IPO closure date: 5-March-2020
Face Value: Rs 10 per share
Issue price band: Rs 750 to Rs 755 per share (approx. final price yet to be announced)
Issue size: 9,000 Crores approx.
IPO Lot size: Yet to be announced
Minimum investment: Yet to be announced
Leading Managers: Kotak Mahindra Capital Services, SBI Capital, Axis Capital, HSBC
Securities, Nomura India Services, DSP Merrillynch Securities
Listing: BSE / NSE
Download SBI Cards IPO here.
What are the Objects of the SBI Cards IPO?

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Here are the objects of the IPO issue.
1) Offer for Sale (OFS): The object of the Offer for Sale is to allow the selling
shareholders to sell equity shares held by them. The company will not receive any
proceeds from the Offer for Sale.
2) Fresh Issue: The net proceeds of the Fresh Issue, i.e. Gross proceeds of the Fresh
Issue less the Offer Expenses apportioned to Company are proposed to be utilized for an
augmenting capital base to meet its future capital requirements.
Who are the Company Promoters?
SBI is the promoter of the company.
How is the company doing in terms of Financial Performance (Reinstated)?
1) Company revenues increased from Rs 3,471 Crores for FY2017 to Rs 7,286 Crores in
FY2019. Its revenues for 9 months ended Dec-2019 is Rs 5,278 Crores.
2) Company profits increased from Rs 372.8 Crores for the year ended Mar-17 to Rs
562.7 Crores for the year ended Mar-19. It posted Rs 614.5 Crores profit for 9 months
ended Dec-2019.
3) Its average EPS in the last 3 years is 7.97 and FY2019 is 9.43. For 9 months ended
Dec-2019, its EPS is at 12.45.

4. What are the key strengths of SBI Cards and Payment Services Limited?
Every investor should understand the company’s key strengths so that they can compare
with its competitors to know how unique such company in their business is. Their
investment decision would change based on these facts. Here are the key strengths of
the SBI Cards and Payment Services.
1) Diversified customer acquisition capabilities.
2) Supported by a strong brand and the pre-eminent Promoter.
3) Diversified portfolio of credit card offerings.
4) Advanced risk management and data analytics capabilities.
5) Modern and scalable technology infrastructure.
6) Highly experienced and professional management team.
7) Second largest credit card issuer in India with deep industry expertise and a
demonstrated track record of growth and profitability.
What are the various strategies of SBI Cards and Payment Services Ltd?

5. Company strategies would help investors to know what company is intending to do in
the future and whether these strategies would help in revenue or margin growth. Such
information would help investors to decide whether to invest for short term, medium
term or for the long term. Here are the company strategies.
1) Expand its customer acquisition capabilities to grow cardholder base.
2) Tap into new cardholder segments by broadening portfolio of credit card products.
3) Stimulate growth in credit card transaction volumes.
4) Continue to optimize its risk management processes.
5) Enhance cardholder experience.
6) Continue leveraging technology across its operations.
Positive Factors to invest SBI Cards IPO
These positive factors can impact company growth, its revenue and margins which can
increase its share price. Investors should go through these points and understand these
positive factors while investing.
1) SBI Cards is 2 largest credit card issuer in India (HDFC Bank is the largest 1 largest
in India) that has 18.1% share as of 31 December, 2019.
2) Consistent growth in revenue in the last few years.
3) Consistent margins in the last 3 years and 9 months.
Major risk Factors to consider before investing in SBI Cards IPO
These risk factors can impact company revenue and margins which would affect its
share price. Investors should go through these points and understand these risk factors
before investing.
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6. 1) They use the “SBI” brand of its Promoter, and are exposed to the risk that the “SBI”
brand may be affected by events beyond its control and that Promoter may prevent
them from using it in the future.
2) They derive substantial benefits from its existing relationship with its Promoter, and a
loss or reduction in the level of support they receive from its Promoter could adversely
affect them.
3) Substantially all of its credit card portfolio is unsupported by any collateral that
could help ensure repayment, and in the event of non-payment by a card holder of their
credit card receivables, they may be unable to collect the unpaid balance.
4) They face competition in the credit card market from other credit card issuers and
payment solutions providers, and they may not be able to compete effectively, which
could result in fewer card holders and lower account balances and could materially
adversely affect its financial condition, cash flows and results of operations.
5) Fraudulent activity associated with its products or its networks could cause its brand
to suffer reputational damage, the use of its products to decrease and its fraud losses to
be materially adversely affected.
6) They rely on third-parties for customer acquisitions, technology, platforms and other
services integral to the operations of its businesses.
7) One of its group companies is involved in SEBI proceedings in relation to certain non-
compliances under securities related laws.
8) Cyber-attacks or other security breaches could have a material adverse effect on its
business, results of operation or financial condition.
9) Its provisions for credit losses may prove to be insufficient to cover losses on its
credit card receivables.
10) For complete internal and external risk factors, you can refer the RHP of the
company.

7. SBI Cards and Payment Services IPO Schedule
Offer Opens – 2-Mar-2020
Offer Closes – 5-Mar-2020
Finalization of Basis of Allotment – 11-Mar-2020
Unblocking of ABSA and Initiation of Refunds – 12-Mar-2020
Credit of shares to Demat Accounts – 13-Mar-2020
IPO Shares Listing Date – 16-Mar-2020
Is the issue price of SBI Cards IPO reasonably priced or over priced?
On the upper price band of Rs 755 (approx, final price yet to be announced) and the last
3 years average EPS of Rs 7.97, the P/E works out to be 95x. Similarly, on the upper
price band of Rs 755 and the last year FY19 average EPS of Rs 9.43, the P/E works out to
be 80x. Even if we take 9 months ended Dec-2019 EPS of 12.45, P/E works out to be
60x. Hence the company is asking the higher price band of Rs 755 in the P/E or 60x to
80x. There are no listed peers in same business to compare, hence we cannot ascertain
whether the issue price is under priced or overpriced.
Should you invest in SBI Cards IPO for medium to long term?
SBI Cards is the subsidiary of SBI and the 2 largest card issuer in India. Its revenues
and margins are consistent and improving. Its issue price cannot be determined whether
it is under priced or overpriced. Considering various positive factors, this is a STRONG
BUY and I would like to subscribe for medium to long term. One can expect good listing
gains too.
FAQs about SBI Card IPO
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8. 1) What products and services does SBI Cards offer?
They offer comprehensive credit cards that include personal credit cards, corporate
cards, white lable cards and value added services like Easy money, ATM cash, flexipay
and balance transfer.
2) Is there any SBI Shareholders reservation in this SBI Cards IPO?
Investors who hold SBI shares as on 18 February, 2020 are eligible to apply under
shareholders category upto Rs 2 Lakhs.
3) Is there any SBI employee reservation in this SBI Cards IPO?
Employees of SBI cards are eligible to apply under employee category up to Rs 5 Lakhs in
this SBI Cards IPO.
4) Can I apply in retail, employee and shareholder quota in SBI Cards IPO?
Investors can apply them in these 3 individual categories a) Apply in the retail category
upto Rs 2 Lakhs b) Apply this IPO in the employee category upto Rs 5 Lakhs c) Apply in
this SBI cards IPO in shareholders category upto Rs 2 Lakhs.
Also Read: Top 10 Best SIP Mutual Funds in 2020
5) What is the face value of SBI Cards IPO Share price?
SBI Cards IPO share price face value is Rs 10 per share.
6) When will SBI cards IPO open?
SBI cards IPO would open for subscription on 2 March and closes on 5 March, 2020.
Once it is listed on BSE/NSE, investors can continue buying. However the price of the
shares might change
7) What is SBI Cards IPO GMP?
Its un-official GMP, the SBI Cards GMP is trading around Rs 1,100 which is over Rs 350
premium to the expected issue price.
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9. 8) What is the Offer break-up?
Here is the offer break-up:
Retail Portion – 35%
QIB – 50%
NIB – 15%
9) Who are the book running lead managers of SBI Cards IPO?
Kotak Mahindra Capital, Axis Capital, BofA Securities, HSBC Securities, Nomura India,
SBI Capital Markets are the book running lead managers to the IPO issue.
10) When is SBI Cards IPO listing date?
The listing date is yet to be announced. Tentatively, it is expected to get listed on 16
March, 2020.
11) How to apply for SBI Card IPO?
You need to have demat account to apply for this IPO. You can login to your demat
account, visit IPO/FPO/NFO section and apply for this IPO. If you do not have demat
account, you can open free demat account to start with.
Readers, what do you feel about investing in this this IPO?
Disclaimer: This article is for information purpose only. Please consult your investment
advisor before you invest in such high risk IPOs.
If you like our IPO analysis, please share it with your friends through email, on Facebook
or on Twitter. This would help us to reach a larger audience and based on the feedback
we can provide more and more meaningful analysis in the coming IPOs.
Suresh KP
SBI Cards and Payment Services IPO Review
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