Keshav Seth 28 October 2026

SBI Cards and Payment Share Price Target at Rs 750: Emkay Global

Emkay Global Financial Services has retained its BUY call on SBI Cards and Payment Services with a target price of Rs 750 by September 2027, about 38% above the current market price of Rs 545. The card issuer's net profit for the September quarter rose 75% from a year earlier to about Rs 778 crore as credit costs eased to 5.6% from 9.6% a year earlier. Growth, however, was thin. Receivables slipped about 2% from a year ago and spends rose only 3% after the company pulled back from low-margin corporate business. Emkay values the stock at 20 times September 2028 estimated earnings.

BUY RETAINEDQ2FY27 Result UpdateCredit Cards / NBFC

SBI Card: Emkay Keeps BUY, Rs 750 Target as Credit Costs Cool and Growth Waits for the Festive Swipe

Profit jumped 75% on a sharp fall in provisions, but receivables shrank and corporate spends were cut back. Emkay says cheap valuations and cleaner books can carry a re-rating.

SALE · RESEARCH CALL
APPROVED ✓

CUSTOMER COPY
MERCHANTEMKAY
TXNBUY
SWIPED AT (CMP)Rs 545
AUTH. LIMIT (TP)Rs 750
CASHBACK+37.6%
VALID THRU09/27
52-WK525 – 965
BASIS 20x SEP-28E EPS
NOT A GUARANTEED RETURN

The Levels

Rating	CMP	Target (Sep-27)	Upside	52-week range	Valuation basis	Market cap
BUY (retained)	Rs 545	Rs 750 (unchanged)	37.6%	Rs 525 – Rs 965	20x Sep-28E EPS	~Rs 51,900 crore

The stock has lost 41.3% over 12 months and trades below two standard deviations under its long-run price-to-earnings average, at 18.8x FY27 and 15.6x FY28 estimated earnings.

A Profit Beat Bought by Provisions

SBI Card's second-quarter earnings tell two stories. On the bottom line, net profit rose 75% year on year and 17% sequentially to about Rs 778 crore, beating Emkay's estimate by 32% and consensus by 23%. Provisions fell 37% to about Rs 819 crore, which did almost all the work.

Above that line the picture is flatter. Net interest income was unchanged from a year ago at about Rs 1,724 crore, operating expenses rose 7%, and pre-provision operating profit slipped 1% to about Rs 1,865 crore. Emkay describes the core as a miss on both total income and operating profit.

Authorisation log · actual vs estimates, Q2FY27
TOTAL NET INCOME · Rs 4,514 crvs Emkay −5% · vs consensus +1%✗ DECLINED
PRE-PROVISION PROFIT · Rs 1,865 crvs Emkay −5% · vs consensus −3%✗ DECLINED
NET PROFIT · Rs 778 crvs Emkay +32% · vs consensus +23%✓ APPROVED

Where the Spending Went

Total card spends rose just 3% year on year and fell 7% from the June quarter to about Rs 1,10,690 crore. The drag was deliberate. Management exited lower-margin corporate categories, and corporate spends dropped 12% year on year and 37% sequentially. Retail spends grew a modest 6%. The company aims to keep corporate business below one-fifth of total spends.

Total bill · Q2FY27

Rs 1,10,690 cr

+3% YoY · −7% QoQ

Retail share · 86.1%

~Rs 95,300 cr

+6% YoY · up from 83.7% of the mix

Corporate share · 13.9%

~Rs 15,400 cr

−12% YoY · down from 16.3% of the mix

Split of the bill: TopNews calculation from Emkay's spends total and its Exhibit 5 retail and corporate shares.

Cards in force rose 8% to about 2.32 crore, with new additions steady at roughly 10 lakh. The co-branded BPCL card crossed 50 lakh cards, and UPI-linked RuPay cards drove about Rs 21,300 crore of spends in the quarter, much of it from Tier 2 and Tier 3 cities.

Engagement is holding up. The 30-day spend-active rate reached 53% even before the festive season, matching last year's festive peak. After avoiding the first wave of e-commerce co-brands four to five years ago on profitability grounds, the issuer now partners with Tata Neu, PhonePe, Google Pay and Flipkart, with Eternal the latest addition. Management also said SBI's share of cards in force rose to 46% from 36% after about 10% of the portfolio was reclassified by acquisition channel.

Why Receivables Went Backwards

Net advances fell about 2% year on year to about Rs 56,530 crore and were flat on the quarter. Emkay points to three causes: a high base, a festive season that began on Oct. 11 this year against Sept. 22 last year, and a heavy mix of transactors, customers who pay in full and earn the issuer no interest.

Receivables mix on the magnetic stripe (% of book)

Q1FY26

Transactor 40
Revolver 24
EMI 36

Q2FY27

Transactor 45
Revolver 22
EMI 33

Source: Emkay Exhibit 7. Grey is the zero-carry share that limits interest income.

Management expects receivables to pick up from the December quarter as festive spends convert into balances and EMI uptake improves, and expects spend per card to exceed Rs 1.7 lakh in that quarter.

Credit Costs Come Down to Earth

Credit cost by quarter · bar length to scale

Q1FY26

9.6%

Q4FY26

7.7%

Q1FY27

6.5%

Q2FY27

5.6%

The stress pool keeps shrinking. Gross Stage 3 assets improved to 1.9% from 2.04% in the June quarter and 2.41% in March, while Stage 2 edged up to 3.7% from 3.6%. Net NPA held at 0.8%. Lower write-offs helped, and the company added a further Rs 30 crore management overlay, taking the buffer to Rs 100 crore against macroeconomic risk.

Management now believes credit costs have largely bottomed out, and newer customers, acquired under stricter underwriting over 12 to 18 months, revolve less than the older book. Annualised return on assets climbed to 4.4% and return on equity to 18.4%.

The Fine Print on Guidance

Most important terms and conditions · management commentary

1. Gross credit cost of about 6% for FY27, within a 5.5-6.0% comfort range.

2. Cost-to-income ratio of 57-59%, though opex will rise in the festive quarter.

3. Medium-term return on assets of 4.0-4.5%.

4. Stable margins, with the EMI share of receivables potentially rising 2-3 percentage points to offset funding costs.

5. Interchange income to track spends, with the current rate near 1.35%.

6. No personal loans on cards for new customers for now; corporate spends to stay below 20%.

The Funding Clock Is Ticking

Margins held at 10.8%, but the cost of funds has already risen about 18 basis points. Treasury bill yields climbed 50 to 55 basis points in six weeks, and borrowings are tied to both T-bills and the repo rate. Any further 50 basis point rise in rates would flow through as the book reprices.

Repricing countdown · days until a rate move reaches the borrowing book

Day 0 · rate hikeDay 60Day 75 · fully repriced

The company's response is on the asset side. Point-of-sale EMI pricing has risen to about 17% from around 16% six to nine months ago, and it is converting zero-carry transactors into EMI customers. On the liability side, working capital loans are currently 70 to 80 basis points cheaper than commercial paper, so CP issuance stays subdued.

How Emkay Gets to Rs 750

Implied Sep-28E EPS ~Rs 37.5
× target P/E 20x
= TP Rs 750

+37.6%

Reverse of card · Emkay valuation, Sep-27 target

Emkay held its target and raised earnings estimates on lower credit costs, with FY27 EPS up 7.6% and FY28 up 4.3%. It argues that a lower multiple already reflects moderating growth and returns, and that improving asset quality can trigger a re-rating.

The arithmetic leans on the earnings line rather than on growth. Emkay expects net profit to compound at about 22% a year from FY26 to FY29, while assets under management grow 7.9% in FY27 before accelerating to 15.1% by FY29. Return on equity is modelled to rise to 17.2%, still well short of the 23% to 26% the company earned in FY22 and FY23.

Metric	FY26	FY27E	FY28E	FY29E
Net profit (Rs crore)	2,166	2,759	3,325	3,928
EPS (Rs)	22.8	29.0 (27.0)	34.9 (33.5)	41.3 (41.2)
AUM growth (%)	1.8	7.9	12.0	15.1
NIM (%)	10.9	10.7	10.6	10.6
RoA / RoE (%)	3.3 / 14.7	4.0 / 16.3	4.3 / 16.9	4.5 / 17.2
P/E (x) / P/ABV (x)	23.9 / 3.4	18.8 / 2.9	15.6 / 2.5	13.2 / 2.2

Earlier EPS estimates in grey brackets. Source: Emkay Research.

Editor's Note

TopNews found these inconsistencies in the Emkay report and used the figures stated here:

Cards in force: Page 1 and the quarterly table give 2.32 crore cards, up 8%. The call notes give 2.26 crore, up 7%, with over 10 lakh additions "during 1QFY27", which looks carried over from the June quarter. We use 2.32 crore.

Receivables growth: The summary says receivables "declined ~2/3% yoy" and the text says "~3/2% yoy/qoq". The quarterly table shows a 2% fall from a year ago and a flat quarter. We use the table.

EPS upgrade: The report says FY27-29 EPS rose "~4-7%". Its revision table shows 7.6%, 4.3% and 0.2%, so FY29 is effectively unchanged.

FY27 estimates: The quarterly table's FY27E column shows net profit of about Rs 2,730 crore and NII of Rs 6,966 crore. The revised financials show Rs 2,759 crore and Rs 7,005 crore. We use the revised financials.

Spend per card: The Rs 1.67 lakh second-quarter figure does not match Exhibit 3, which shows quarterly spend per card near Rs 49,000. The report does not explain the basis.

Credit cost: Emkay's model assumes 7.0% total credit cost for FY27, above management's 5.5-6.0% range and the 5.6% reported in the quarter, even though the report cites "lower credit cost estimates".

Risk Alerts

⚠ ALERT · EMKAY

Slower growth. If the festive pickup in receivables fails to arrive, earnings growth lags the model.

⚠ ALERT · EMKAY

Asset-quality slippage. A turn in unsecured credit would reverse the provision tailwind.

⚠ ALERT · EMKAY

Leadership attrition. Departures among key managerial personnel.

⚠ ALERT · TOPNEWS

Funding squeeze. Further repo hikes could outrun EMI repricing and compress margins.

The first three risks are Emkay's own. The fourth is a TopNews addition based on the report's funding commentary.

Sources

Emkay Global Financial Services, "SBI Cards: Weak receivables growth; credit costs normalize", result update dated Oct. 26, 2026; analysts Avinash Singh, Nikhil Vaishnav and Aman Mehta. Company data as cited by Emkay. Rupee figures converted to crore by TopNews. The spends split, the implied Sep-28E EPS (Rs 750 divided by 20; a simple FY28E-FY29E blend gives about Rs 38.1, or roughly Rs 762) and the repricing strip are TopNews presentations built from Emkay's printed figures.

Disclaimer: This TopNews Story is based on a third-party brokerage report and is for information only. It is not investment advice. Stock market investments are subject to market risks. Readers should consult a registered financial adviser before making any investment decision.

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