The IPO is likely to be priced in a band of Rs 690-700 per share, the bankers said. In the unofficial grey market, SBI shares are being traded at Rs 950-970 per share, about 38 per cent over its likely IPO price. SBI Cards is likely to be valued at Rs 60,000 crore in the IPO, implying valuations 41 times FY20 annualised earnings per share as against 9-18 times of global peers.
“Expected valuations of 12 times FY2020 estimated price to book is 243 per cent premium to US credit card companies like Amex or Discovery, despite similar return on equity,” said Pankaj Agarwal, analyst, Ambit Capital. “However, higher earnings growth of 41 per cent plus for SBI Cards vs 16-19 per cent growth for Amex or Discovery should command a higher premium over US card companies”.
Parent State Bank of India added a record 3.6 lakh shareholders in December quarter as a portion of the shares in the SBI Cards IPO are reserved for the state-owned lender’s shareholders. The chances of getting allotment in this category may be higher than that in the general retail category, said brokers.
The company will offer up to 13.05 crore equity shares via the offer for sale route, according to the draft red herring prospectors (DRHP).