The Rs 10,355-crore public offer of the country's second largest credit card issuer SBI Cards and Payment Services has been oversubscribed 26.54 times so far on the final day of bidding, March 5. The offer has received bids for more than 266.16 crore equity shares against the IPO size of over 10 crore shares (excluding anchor book over 3.66 crore shares), the exchanges data showed. The portion set aside for non-institutional investors (high-networth individuals) is subscribed 45.22 times, and that of retail is subscribed 2.50 times. The reserved portion of employees saw a 4.73 times subscription, while that of State Bank of India's shareholders portion is oversubscribed 25.35 times. SBI Card will offer shares to its employees at a discount of Rs 75 over final IPO price that is expected to be decided in the next couple of days. The qualified institutional buyers' portion, which closed on March 4, was subscribed 57.18 times. Meanwhile, the company garnered Rs 2,768.55 crore through anchor book, which closed on February 28. The largest public issue since October 2017, which has a price band of Rs 750-755 per share, consists a fresh issue of Rs 500 crore and offer for sale of more than 13 crore shares by parent firm State Bank of India and CA Rover Holdings, an affiliate of global private equity firm Carlyle Group. SBI shareholding will reduced to 69.51 percent after the issue. We value the stock on price-to-earnings (PE) multiple as we believe that the high contribution of fee-based income in total revenue is not linked to balance-sheet or net-worth growth. At the upper band of the issue price of Rs 755, it is valued at 38.4x/30.3x FY21/22 earnings per share of Rs 19.7/24.9, said PhillipCapital which advised subscribing the issue. According to the global brokerage, SBI Card is likely to deliver superior earnings CAGR of 39 percent over FY19-22 translating into return on average assets (ROAA) of 5.8/5.7 percent and return on average equity (ROAE) of 29 percent in this period. Credit cards are unique consumer-financial products that offer both credit and payment facilities simultaneously. As such, they have served as the means by which Indian consumer spent Rs 5.5 lakh crore in the nine months ending December 2019 which has translated into outstanding credit-card loans of Rs 1.4 lakh crore as on December 2019. Credit cards provide fund-based revenue in the form of interest income and non-fund-based revenue in the form of subscription and spend based fees, resulting in an efficient capital structure, which provides strong return ratios for the business. The Indian market, being a growing consumption market with low penetration levels for credit cards, provides great opportunity and scope, said PhillipCapital. Prabhudas Lilladher has initiated coverage on SBI Cards and Payment Services with a buy recommendation and target price of Rs 1,191. The brokerage believes that SBI Card is a formidable play on rising discretionary spends and non cash economy given a) broad reach and parentage of SBI b) under-utilized captive banca potential c) leadership in co-branded cards and d) 40 percent contribution of premium cards. We estimate 23 percent CAGR in total cards-in-force which will enable 27 percent CAGR in in loan receivables and revenues. Strong risk management and data analytics capabilities will enable a steady 14 percent NIMs, 2.5-2.6 percent gross non-performing assets and ROA/ROE of 6 percent and 28 percent despite credit costs of 0.4 percent given high risk unsecured lending model, said Prabhudas Lilladher. Incorporated in 1998, SBI Cards and Payment Services Limited is a subsidiary of SBI, India's largest commercial bank in terms of deposits, advances and the number of branches. SBI currently holds (along with its nominees) 689,927,363 Equity Shares, constituting to 74.00 % of the pre-Offer issued, subscribed and paid-up Equity Share capital of the Company. The company the 2nd largest credit card issuer in the country, with a 17.6% and 18.1% market share of the Indian credit card market (number of credit cards) as of March 31, 2019, and November 30, 2019, respectively, and a 17.1% and 17.9% market share of the Indian credit card market ( total credit card spends) in fiscal 2019 and in the eight months ended November 30, 2019. SBI Cards offers a wide range of credit cards to individual and corporate clients including lifestyle, rewards, shopping, travel, fuel, banking partnership cards, and corporate cards, etc. SBI Cards has partnered with several leading names across industries, including Air India, Apollo Hospitals, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money and Yatra, amongst others. As a subsidiary of SBI, the company has access to SBI's extensive network of 21,961 branches across India. The partnership enables it to market its cards to a huge customer base of 445.5 million customers. Headquartered in New Delhi, as of December 31, 2019, the company has a sales force of 38,677 outsourced sales personnel operating out of 145 Indian cities. The company's total income increased at a CAGR of 44.9% and the revenues from operations have increased at a CAGR of 44.6% between fiscal 2017 to 2019. The net profit grew at a CAGR of 52.1% during the period. The Rs 10,355-crore public offer of the country's second largest credit card issuer SBI Cards and Payment Services has been oversubscribed 26.54 times so far on the final day of bidding, March 5. The offer has received bids for more than 266.16 crore equity shares against the IPO size of over 10 crore shares (excluding anchor book over 3.66 crore shares), the exchanges data showed. The portion set aside for non-institutional investors (high-networth individuals) is subscribed 45.22 times, and that of retail is subscribed 2.50 times. The reserved portion of employees saw a 4.73 times subscription, while that of State Bank of India's shareholders portion is oversubscribed 25.35 times. SBI Card will offer shares to its employees at a discount of Rs 75 over final IPO price that is expected to be decided in the next couple of days. The qualified institutional buyers' portion, which closed on March 4, was subscribed 57.18 times. Meanwhile, the company garnered Rs 2,768.55 crore through anchor book, which closed on February 28. The largest public issue since October 2017, which has a price band of Rs 750-755 per share, consists a fresh issue of Rs 500 crore and offer for sale of more than 13 crore shares by parent firm State Bank of India and CA Rover Holdings, an affiliate of global private equity firm Carlyle Group. SBI shareholding will reduced to 69.51 percent after the issue. We value the stock on price-to-earnings (PE) multiple as we believe that the high contribution of fee-based income in total revenue is not linked to balance-sheet or net-worth growth. At the upper band of the issue price of Rs 755, it is valued at 38.4x/30.3x FY21/22 earnings per share of Rs 19.7/24.9, said PhillipCapital which advised subscribing the issue. According to the global brokerage, SBI Card is likely to deliver superior earnings CAGR of 39 percent over FY19-22 translating into return on average assets (ROAA) of 5.8/5.7 percent and return on average equity (ROAE) of 29 percent in this period. Credit cards are unique consumer-financial products that offer both credit and payment facilities simultaneously. As such, they have served as the means by which Indian consumer spent Rs 5.5 lakh crore in the nine months ending December 2019 which has translated into outstanding credit-card loans of Rs 1.4 lakh crore as on December 2019. Credit cards provide fund-based revenue in the form of interest income and non-fund-based revenue in the form of subscription and spend based fees, resulting in an efficient capital structure, which provides strong return ratios for the business. The Indian market, being a growing consumption market with low penetration levels for credit cards, provides great opportunity and scope, said PhillipCapital. Prabhudas Lilladher has initiated coverage on SBI Cards and Payment Services with a buy recommendation and target price of Rs 1,191. The brokerage believes that SBI Card is a formidable play on rising discretionary spends and non cash economy given a) broad reach and parentage of SBI b) under-utilized captive banca potential c) leadership in co-branded cards and d) 40 percent contribution of premium cards. We estimate 23 percent CAGR in total cards-in-force which will enable 27 percent CAGR in in loan receivables and revenues. Strong risk management and data analytics capabilities will enable a steady 14 percent NIMs, 2.5-2.6 percent gross non-performing assets and ROA/ROE of 6 percent and 28 percent despite credit costs of 0.4 percent given high risk unsecured lending model, said Prabhudas Lilladher. Incorporated in 1998, SBI Cards and Payment Services Limited is a subsidiary of SBI, India's largest commercial bank in terms of deposits, advances and the number of branches. SBI currently holds (along with its nominees) 689,927,363 Equity Shares, constituting to 74.00 % of the pre-Offer issued, subscribed and paid-up Equity Share capital of the Company. The company the 2nd largest credit card issuer in the country, with a 17.6% and 18.1% market share of the Indian credit card market (number of credit cards) as of March 31, 2019, and November 30, 2019, respectively, and a 17.1% and 17.9% market share of the Indian credit card market ( total credit card spends) in fiscal 2019 and in the eight months ended November 30, 2019. SBI Cards offers a wide range of credit cards to individual and corporate clients including lifestyle, rewards, shopping, travel, fuel, banking partnership cards, and corporate cards, etc. SBI Cards has partnered with several leading names across industries, including Air India, Apollo Hospitals, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money and Yatra, amongst others. As a subsidiary of SBI, the company has access to SBI's extensive network of 21,961 branches across India. The partnership enables it to market its cards to a huge customer base of 445.5 million customers. Headquartered in New Delhi, as of December 31, 2019, the company has a sales force of 38,677 outsourced sales personnel operating out of 145 Indian cities. The company's total income increased at a CAGR of 44.9% and the revenues from operations have increased at a CAGR of 44.6% between fiscal 2017 to 2019. The net profit grew at a CAGR of 52.1% during the period. Submit