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Only red herring about SBI Card is its single product biz: Ravikant Bhat

They are likely to remain on top of the game but it will be interesting to see how well they manage the risk, says the IndiaNivesh Securities analyst.

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Last Updated: Feb 26, 2020, 03.47 PM IST
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Ravikant-Bhat-Linkdin
What is the scope of SBI Card post listing? Can it be a D-Mart and an IRCTC in the making because it has got everything which could be called a moat. It is a business which grows without capital, it has a unique proposition because it is the only listed credit card company that will be available.

If you look at the financial services space, you would not come across a company, which is actually delivering the kind of ROEs and ROAs that SBI Card would be delivering. The only red herring I would highlight is that it is a single product company. Therefore, how well they manage the risk is something which one needs to look at but suffice to say that you would not get these ROEs and ROAs in any other financial services player. You are right when you say that it is not a pure balance sheet business. So you have to keep adding capital every year; so it is a cash flow generating business in a way. It would be interesting to see how well the valuations really can move up but going by the fact that they have been growing very fast, there still seems to be scope, especially given the fact that they have begun originating quite a bit from the SBI channel also. They are likely to remain on top of the game. I do not know whether it can be a multi-bagger like a D-Mart but it definitely will be there at the top in terms of premium valuations.

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