SBI Cards IPO: Things to know about State Bank subsidiary's money-making initial public offer

SBI Cards IPO: The State Bank of India or SBI is coming out with two IPOs in 2020 — SBI Card and UTI AMC. SBI Cards and Payment Services Ltd has already submitted its application (SBI Cards IPO RHP) with the Securities and Exchange Board of India (SEBI). SBI Card IPO will be Rs 9,500 crore worth. Having an idea about the strong fundamentals and SBI as its promoter group, the majority of the stock market experts have recommended a 'Strong Buy' for the SBI Cards IPO once it becomes available for subscription to the share market investors.

Giving details of SBI Cards IPO fundamentals, Anand Dama, Research Analyst at Emkay Global said, "SBI Cards is likely to be valued at around Rs 600bn in the IPO, implying premium valuations post-money (PE of 41x based on H1FY20 annualized EPS) against its developed or developing economy peers that are trading around 9-18x PE. For SBI bank, the SBI Cards IPO at this valuation would imply a value of Rs 417bn/Rs37 per share (post discount), which is higher than our and Street’s estimate, adding around Rs 15 to our target price for SBI (Rs 350)."

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However, apart from the strategy that an investor should adopt when the SBI Cards IPO becomes available for subscription, there are some more details that an investor should know, especially how does SBI's brand name is going to support SBI Cards IPO and its investors. Speaking on the SBI impact on SBI Cards IPO success, Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal said, "SBI currently holds (along with its nominees) 689,927,363 Equity Shares, constituting to 74 per cent of the pre-Offer issued, subscribed and paid-up Equity Share capital of the Company." Taparia said that as a subsidiary of SBI, the company has access to the lender's extensive network of 22,007 branches across India. The partnership enables it to market its cards to a huge customer base of 436.4 million customers.

Once it becomes available for subscription, SBI Cards IPO will be listed on both NSE and BSE. The face value of the SBI Cards IPO would be Rs 10 per equity shares. Offer for sale is 130,526,798 Equity Shares of Rs 10.

Stock market investors who hold SBI shares on the cut-off date would be eligible to apply under the shareholder's category of SBI Cards IPO. As per the SEBI norms, the maximum limit defined for the 'retail individual shareholders to apply in shareholder category is Rs 2 lakhs. SBI shareholders (bidding up to Rs 2 lakhs) can also apply under the retail category. Further, if an SBI shareholder is also an SBI employee, he or she is also eligible to apply in all the three categories — RII (up to Rs 2 lakhs), Shareholder (up to Rs 2 lakhs) and Employees (up to Rs 5 lakhs).