SBI Cards IPO Can Give About 40% Returns as Listing Gains

SBI Cards and Payment Services, the country’s 2nd largest credit card issuer, is expected to be the iconic IPO of 2020, as per experts. The much-awaited IPO(Initial Public Offering) will be opened for subscription from March 2-5. It is expected to be around Rs 750-755 per share.

After an elongated waiting period in this volatile market scenario, market regulator SEBI permitted to float its IPO which triggered grey market demand around Rs 320 per share. 

The current grey market premium is likely to rise further as the issue approaches its opening date, and there could be massive oversubscription as there may be major value unlocking.

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On the basis of the higher end of the issue price band, SBI Cards aimed to collect Rs 10,352 crores

through the public issue which consists of a fresh issue of Rs 500 crores and offer for sale of over Rs 13 crores shares by State Bank of India and CA Rover Holdings. SBI will sell more than 3.7 crores shares and CA Rover Holdings over 9.3 crores shares through an offer for sale.

The 2nd largest player in the Indian credit cards market with closely 18% market share, healthy financial ratios, supported by strong parentage, the first company to list from the credit card industry, etc would be the major reason behind the expected increase in grey market premium and massive oversubscription.

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Right now SBI holds a 74% stake in the company and the rest is held by CA Rover Holdings. The issue for anchor investors will open for a day on Feb 28, the day before the issue opening on March 2. 

Kotak Mahindra Capital Company, DSP Merrill Lynch, HSBC Securities and Capital Markets (India), Axis Capital, Nomura Financial Advisory and Securities (India) and SBI Capital Markets are the books running lead managers to the issue.