नमस्कार मित्रो। एंजेल वन के इस podcast में आपका स्वागत है ।
SBI cards and payments is the second largest credit card company in India. Credit market mein SBI cards and payments ka lagbhag 18% market share hai. SBI cards and payments main SBI Bank ka 74% controlling stake hai. Recently SBI cards and payments ke stocks ka initial public offering, that is, IPO hua.
In this podcast we will discuss the details of this IPO and how the coronavirus panic spoiled the party for SBI cards in certain ways. We will also discuss why the SBI cards' stock remains a good long term bet.
SBI cards ka IPO discuss karne se pahle SBI cards kis kisam ki company hai uss per ek najar dalte Hain. SBI cards, despite being the second largest issue of credit cards in India, gets almost half of its revenue from non interest sources. The share of non interest income has risen from 43.6 percent in 2017 to almost 49% in 2019. Yah ek acchi baat isliye hai kyunki ki this makes SBI cards a little more immune to changes and fluctuations in the interest rate. Non-interest income includes late fees and interchange fees. Late fees are applied when the credit card holder does not pay the minimum required amount before the due date expires. Interchange fees, on the other hand, are paid by retail and online merchants for being able to accept the credit card from their customers. Since the presence of cashless transactions increases the merchants' business, they need to compensate the credit card company for maintaining the offline and online infrastructure that makes cashless transactions possible. SBI cards' income from all of these different sources has been on the rise.
Another positive development is that SBI cards and payments is a profitable company. Its revenue over the last 3 years has grown at a compound annual growth rate of almost 45%. It's net profits have grown at even faster compound annual growth rate of 52%.
Therefore SBI cards and payments is a company with strong fundamentals. Its long term expansion prospects look positive.
For this reason a lot of people were excited for this IPO. SBI cards was planning to raise up to 10,300 crores from this IPO. This was all set to become the biggest Indian IPO of 2020 and among the top five biggest ipos of all time in India. However, when the IPO was just about to roll out, coronavirus began to spread outside China all over the world. Iss se market mein panic baith gaya and stock market indexes around the world saw record breaking single day drops.
The SBI cards and payments IPO was not immune from this panic. SBI cards' stocks started trading on the National stock exchange and Bombay stock exchange. They started with an initial price of 755 rupees but that has steadily declined as the trading has continued. On both the indexes the price of an SBI cards' stock has declined by almost 10%. This is not surprising as the Bombay stock exchange has lost almost 10,000 points after touching a high point in January.
However, the experts believe that investors should continue to remain bullish on the long-term prospects of the SBI cards' stock. There are three main reasons for it.
First, SBI cards ek aise business mein function kar raha hai Jahan growth prospect extremely high hai. India's low credit card penetration is all set to change in the coming decade. The signs for the coming expansion are there for all to see in the numbers from the last 5 years. Everything from the number of transactions to the amount transacted to to the number of card holders has doubled since 2015. As India's middle class expands and gathers more purchasing power and greater aspirations, the credit card penetration will keep increasing. As one of the leading providers of a commodity - a credit card - whose demand will increase in the next 10 to 20 years, SBI cards has a bright long-term future.
Secondly, SBI cards is in a very niche market. As of now, the number of credit card providers is much less than the number of debit card providers. Therefore the fact that SBI cards is a big fish in a small pond will help its business in the coming years.
Thirdly, with the SBI Bank being the parent company, SBI cards has strong organisational support. The SBI bank is after all the biggest bank in the country. Its close relationship with the SBI Bank will help SBI cards gain the investor's trust. That will, in turn, lead to a favourable cash flow which the company can turn into sustained growth. This is the benefit that SBI cards has, as an offshoot of a prestige bank.
Because of the current panic in the market SBI card stock could be said to be trading at a discount. Interested traders can, after doing their due research, easily purchase IPO cards' stock from an authorised broker or from their net banking account. All that they need to do is log into their account, go to the IPO section and invest the sum that they wish to invest. While it is not compulsory to own a trading account to buy stocks in a company's IPO, it is compulsory to have a demat account. A demat account is where your shares will be stored. But don't worry - you can start your demat account with Angel broking all by yourself in less than 10 minutes
चलिए, एंजेल वन की तरफ से आपको आज के अलविदा. ये podcast शेयर करना ना भूलियेगा - याद रखियेगा की ज्ञान बाटने से बढ़ता है । और फिर अंत में तोह financial markets एक ऐसी university है जिसमे कोई professor नहीं, सब students ही है ।
In this podcast we will discuss the details of this IPO and how the coronavirus panic spoiled the party for SBI cards in certain ways. We will also discuss why the SBI cards' stock remains a good long term bet.
SBI cards ka IPO discuss karne se pahle SBI cards kis kisam ki company hai uss per ek najar dalte Hain. SBI cards, despite being the second largest issue of credit cards in India, gets almost half of its revenue from non interest sources. The share of non interest income has risen from 43.6 percent in 2017 to almost 49% in 2019. Yah ek acchi baat isliye hai kyunki ki this makes SBI cards a little more immune to changes and fluctuations in the interest rate. Non-interest income includes late fees and interchange fees. Late fees are applied when the credit card holder does not pay the minimum required amount before the due date expires. Interchange fees, on the other hand, are paid by retail and online merchants for being able to accept the credit card from their customers. Since the presence of cashless transactions increases the merchants' business, they need to compensate the credit card company for maintaining the offline and online infrastructure that makes cashless transactions possible. SBI cards' income from all of these different sources has been on the rise.
Another positive development is that SBI cards and payments is a profitable company. Its revenue over the last 3 years has grown at a compound annual growth rate of almost 45%. It's net profits have grown at even faster compound annual growth rate of 52%.
Therefore SBI cards and payments is a company with strong fundamentals. Its long term expansion prospects look positive.
For this reason a lot of people were excited for this IPO. SBI cards was planning to raise up to 10,300 crores from this IPO. This was all set to become the biggest Indian IPO of 2020 and among the top five biggest ipos of all time in India. However, when the IPO was just about to roll out, coronavirus began to spread outside China all over the world. Iss se market mein panic baith gaya and stock market indexes around the world saw record breaking single day drops.
The SBI cards and payments IPO was not immune from this panic. SBI cards' stocks started trading on the National stock exchange and Bombay stock exchange. They started with an initial price of 755 rupees but that has steadily declined as the trading has continued. On both the indexes the price of an SBI cards' stock has declined by almost 10%. This is not surprising as the Bombay stock exchange has lost almost 10,000 points after touching a high point in January.
However, the experts believe that investors should continue to remain bullish on the long-term prospects of the SBI cards' stock. There are three main reasons for it.
First, SBI cards ek aise business mein function kar raha hai Jahan growth prospect extremely high hai. India's low credit card penetration is all set to change in the coming decade. The signs for the coming expansion are there for all to see in the numbers from the last 5 years. Everything from the number of transactions to the amount transacted to to the number of card holders has doubled since 2015. As India's middle class expands and gathers more purchasing power and greater aspirations, the credit card penetration will keep increasing. As one of the leading providers of a commodity - a credit card - whose demand will increase in the next 10 to 20 years, SBI cards has a bright long-term future.
Secondly, SBI cards is in a very niche market. As of now, the number of credit card providers is much less than the number of debit card providers. Therefore the fact that SBI cards is a big fish in a small pond will help its business in the coming years.
Thirdly, with the SBI Bank being the parent company, SBI cards has strong organisational support. The SBI bank is after all the biggest bank in the country. Its close relationship with the SBI Bank will help SBI cards gain the investor's trust. That will, in turn, lead to a favourable cash flow which the company can turn into sustained growth. This is the benefit that SBI cards has, as an offshoot of a prestige bank.
Because of the current panic in the market SBI card stock could be said to be trading at a discount. Interested traders can, after doing their due research, easily purchase IPO cards' stock from an authorised broker or from their net banking account. All that they need to do is log into their account, go to the IPO section and invest the sum that they wish to invest. While it is not compulsory to own a trading account to buy stocks in a company's IPO, it is compulsory to have a demat account. A demat account is where your shares will be stored. But don't worry - you can start your demat account with Angel broking all by yourself in less than 10 minutes
चलिए, एंजेल वन की तरफ से आपको आज के अलविदा. ये podcast शेयर करना ना भूलियेगा - याद रखियेगा की ज्ञान बाटने से बढ़ता है । और फिर अंत में तोह financial markets एक ऐसी university है जिसमे कोई professor नहीं, सब students ही है ।
