India’s biggest lender State Bank of India has lifted the curtain and announced that the price band of the initial public offer (IPO) of SBI Cards and Payment Services has been fixed at Rs 750-755 per share. The SBI Cards IPO will open for subscription on March 2 and will be open till March 5. “State Bank of India has been informed by SBI Cards that the IPO Committee of SBI Cards in consultation with the Book Running Lead Managers have finalised the price band to range between Rs 750/- to Rs 755 per equity share,” the bank said in a regulatory filing on Tuesday.
The second-largest credit card issuer in India, SBI Cards is an arm of public sector lender State Bank of India and has a market share of 18 per cent. Employees of the State Bank of India will be eligible for a discount on the IPO of Rs 75 per share. The bid lot has been finalised to be 19 shares and in multiples thereafter.
The IPO is expected to raise around Rs 9,000 crore, making it the fifth-largest IPO in the country. The SBI Cards IPO would offer a fresh issue of Rs 500 crore and an offer for sale of up to 13,05,26,798 equity shares, according to the DRHP filed with SEBI in November 2019. It includes up to 3,72,93,371 equity shares by SBI and up to 9,32,33,427 equity shares by CA Rover Holdings.
Analysts see SBI Cards IPO as a good bet hoping the company will give similar returns to PSU IPOs like IRCTC. However, getting the share at a good price remains the key. “The company (SBI Cards) has a strong track record of growth and profitability and has economies of scale leading to significant operating efficiencies. Further, with its promoter – SBI’s strong and wide presence across the country, we believe the company would continue to grow at a robust pace and outperform the industry. However, as per media reports, the company is expected to be priced at an expensive valuation against its global peers. Therefore, while we believe SBI cards would be a good long term bet for investors, acquiring the same at reasonable valuations would be the key,” Ajit Mishra, VP Research of Religare Broking had recently told Financial Express Online.
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