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My View on SBI Cards IPO

Overview of SBI Card
(a) They are the second-largest credit card issuer in India, with an 18.0% market share of the Indian credit card market in terms of the number of credit cards outstanding as of September 30, 2019. SBI Card is a subsidiary of State Bank of India.
(b) They offer an extensive credit card portfolio to individual cardholders and corporate clients which includes lifestyle, rewards, travel and fuel, shopping, banking partnership cards and corporate cards covering all major cardholder segments in terms of income profiles and lifestyles.
(c) It has a sales force of 33,086 outsourced sales personnel as of September 30, 2019, operating out of 133 Indian cities. Had a presence in 3,009 open market points of sale across India as of September 30, 2019.
In addition, its partnership with SBI provides access to SBI’s extensive network of 22,007 branches across India, which enables it to market credit cards to SBI’s vast customer base of 43.6 Crores customers as of March 31, 2019.
Revenue Model
They generate three types of income:
(a) Non-interest income (primarily comprised of fee-based income such as interchange fees, late fees, and annual fees, among others)
(b) Interest income on credit card loans.
(c) MDR( Merchant Discount Rate)- The fees credit card company charges from the merchant for providing a facility to pay when a customer buys the product from the shop. Here, three business comes into the picture.
Credit Card Company ( 1st Business) charges a 2-3% MDR fee from the merchant to facilitate the buying option for customers. Now, the credit card company alone can’t do this transaction. It is only providing the credit facility to customers. The transfer of money from a credit card company to a merchant’s bank account is facilitated by the Network providers ( 2nd Business), such as Master Card, VISA  and payment gateways companies. Now, finally without POS Machine( 3rd Business)  both the above business is of no use. So, here comes the third business, i.e. Swap machine provider.
Here if the Credit Card company is charging Rs.100 as MDR Fees from the merchant, then 75-80% goes to Credit Card company, 20-25% to the network provider or rest to POS machine provider.
Financial Performance
(a) The total income increased from ₹3471 Crores in fiscal 2017 to ₹7286 Crores in fiscal 2019 at a CAGR of 44.9% and revenues from operations have increased from ₹3346 Crores in fiscal 2017 to ₹6999 Crores in fiscal 2019 at a CAGR of 44.6%.
(b) The net profit increased from ₹372 Crores in fiscal 2017 to ₹862 Crores in fiscal 2019 at a CAGR of 52.1%.
(c) The ROAE has remained stable at 28.5% in fiscal 2017 and 28.4% in fiscal 2019, while ROAA increased from 4.0% in fiscal 2017 to 4.8% in fiscal 2019.
Final Take  - Must Subscribe ( DO NOT MISS)
Our First condition of Investing into an IPO is that we shouldn't incur a loss & there are 99.9% chances that this IPO doesn't list below the issue Price. Markets are very weak as of now so listing gains might be effected if Market Continues to remain Weak but it won't effect the inflow for the IPO.
Even if Nifty Falls 1000 Points from here i do not think that this IPO should give you a loss on the Listing day.
Expected Listing Gains -  15-40% MINIMUM
This IPO is expected to be Oversubscribed by a Huge amount of times , so advice to Retailers would be to apply / Subscribe for 1 lot from 1 Demat.
IPO will be Open upto 5th March 2020 (4 Working Days)


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