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Investing.com - Macquarie has downgraded SBI Cards and Payment Services (SBICARD:IN) from Outperform to Neutral while raising its price target to INR1,040.00 from INR1,000.00.
The downgrade comes despite the higher price target, with Macquarie analyst Suresh Ganapathy citing concerns about the pace of loan growth improvement in the near term.
The research firm noted that SBI Cards’ exposure to the current unsecured credit cycle would likely result in slower-than-desired loan growth improvement, while margin expansion is expected to remain limited.
Macquarie’s valuation of SBI Cards at 5x FY27E price-to-book ratio factors in sustainable return on assets of 4.5%, which the firm believes is adequate for the credit card issuer.
The trajectory of credit costs remains "a key monitorable" for SBI Cards going forward, according to the Macquarie research note.
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