SBI card IPO, opportunities and threats


SBI cards and payments services are to be listed on 16th March 2020, and its shares will be issued in the capital market between 2nd March and 4th March 2020. The IPO value of the shares is Rs. 9000 crores, and 13 crores shares will be sold between 2nd to 4th March. SBI cards and payments services plan to raise Rs. 500 crores from the capital market and is offering to sell its existing shares worth Rs. 9,854 crores via IPO. Market pundits are optimistic about the IPO and consider it a good investment in the long run. The stock is already running at a premium of Rs. 370-375 in the gray market, and it is expected that the premium on the stock will increase as the date of IPO nears. 

The IPO price of SBI cards and payments services will be in the range Rs. 750- Rs.755, with a maximum issue size of Rs. 10,354 crores, where the market cap has been set at Rs. 70,891 crores. One can bid for a lot size of 19. Generously, SBI employees will be offered the shares for Rs. 75 per share. 

Recent trends in the IPO market have shown encouraging sign, where IPOs of IRCTC, Ujjivan and CSB bank oversubscribed by 109, 100 and 48 times. Considering the bullish trend of the market and parentage of SBI, it is likely that SBI cards and payment services will also perform outstandingly. The company already has 1 crore cards in use and has recorded spending of Rs. 9,8500 crores in December 2019.

There are speculated risks like the popularity of virtual cards amongst youth and selective expending due to economic slowdown. Though, SBI cards have not been affected by any of these factors so far.

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