SBI or SBI Cards & Payment: Whats your choice?

On Monday, Bank Nifty zoomed by around 2.17 per cent and S&P BSE Bankex was up by 2.37 per cent. While banking and financial stocks rally, SBI Cards, and its parent company, SBI is not shy of being favoured by the investors.

Since the last few months of 2019 and the beginning of 2020, the stock of State Bank of India (SBI) was buzzing and considered to be the most sought-after. The 52-week high is of Rs 351 per share made on November 28, 2019.

Previously, SBI Cards & Payment Services IPO had made a buzz in markets as it was one of the largest share sales in recent times, both in terms of size as well as oversubscription. Few months after its listing, the scrip has gained by more than 20 per cent.

SBI Cards made its fresh 52-week high of Rs 918.60 per share recently, with which, its market cap expanded to Rs 82,703.34 crore, which is almost half of its parent firm SBI’s mcap that stands at Rs 1,78,983.08 crore.

Though investors seemed to be fond of SBI, the fact is that in absolute terms, it has lost more market cap than any other listed stock on the bourses since the markets made all-time highs. The shares of SBI were seen trading in the range of Rs 190–Rs 200 per share on BSE, which is a fall by more than 40 per cent from its 52-week high price.

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SBI Cards, being the only listed credit card company, has drawn investors’ attention in the wake of the COVID-19 pandemic as digitisation becomes the core necessity. To attract more customers, the company has also rolled out a range of festive season offers in line with the changing shopping trends that will further allow customers to benefit from offered discounts as well as cashback across a host of brands. 

While the banking and financial sector has seen minor rallies in recent months, analysts believe that the sector may continue to remain weak in the future. In spite of that, SBI is considered to be well-positioned to deliver stable performance for the coming quarters.

SBI, owing to its underperformance, is also touted to be a contra bet by several analysts. However, the large private banks seem to be outperforming SBI. 

The momentum clearly seems to be in favour of SBI Cards with the stock clearly outperforming its parent viz., SBI on a YTD basis. With the superlative growth in place for SBI Cards and the festive season fast approaching, the latter may remain in focus for both, short-term as well as long-term investors.