SBI Cards IPO subscribed 26 times despite tough market conditions

SBI Cards and Payment Services’ initial public offering (IPO) has figured out how to pull in offers worth Rs 2 trillion, regardless of testing economic situations. This has made it among the most bought in contributions in total terms. The 100- million offer contribution created near 2.7 billion offers (26x). The high networth individual (HNI) segment of the IPO was bought in 44x, with the retail partition being bought in 2.5x. Employee segment reported 4.7x subscription, while shareholder group was subscribed 25x – making it an unusual case where employee and shareholder segments received higher subscriptions than retail segments.

Shareholders of parent State Bank of India (SBI) were eligible to apply through the ‘shareholder’ category. The institutional portion of the IPO, which closed on Wednesday, had garnered 57x subscription. “Despite tough market conditions, the IPO has done well as the SBI Cards are a unique high quality brand from the powerful SBI stable. The business model has echoed the best institutional investors in the world”, said Salil Pitale, Axis Capital’s joint Managing Director and Co-managing director. The key factors, he said, were good productivity, high return ratios and a strong growth potential. Some brokerages had suggested subscribing to the SBI Cards IPO for similar reasons.

SBI Cards are well-placed to benefit from the rising trend of digital payments and e-commerce, given its dominant position in the credit card industry and fast parentage. Strong growth, stable asset quality and high return ratios provide comfort and justify the valuation of the premium. Furthermore, being the first to be listed in the category,it could generate a high interest from investors, Said a note from Motilal Oswal. SBI Cards deliver investment opportunities with high profitability in a specific business model. Sustainability of higher business growth and solid return ratios supports the business premium valuation”, ICICI Direct added. Given the massive over subscription, SBI Cards shares are priced at the upper end of the Rs.750-755 price band per share. At the top end, the post- issue market capitalization of SBI Cards operates at about Rs.71,000 crore making it the 38^th most valuable company in India.