SBI Playing cards and Cost Companies Ltd. reported a combined but encouraging fourth quarter efficiency, with each Morgan Stanley and Macquarie highlighting the optimistic shift in credit score price tendencies. Whereas credit score prices have lastly begun to ease after eight consecutive quarters of stress, views differ on how sustainable the advance will probably be, and the way the inventory is at present priced.
Internet revenue got here in at Rs 530 crore, down 19% year-on-year however up 39% quarter-on-quarter, beating analysts’ expectations by 13%–15%. In addition to decrease operational bills, web curiosity margins, which rose 54 foundation factors sequentially to 11.2%, have been increased than anticipated. Credit score prices, a key concern over latest quarters, declined to 9.0% from 9.5% QoQ.
Macquarie stays bullish, sustaining an ‘outperform’ score and a goal value of Rs 1,000. The agency notes that credit score prices have been in line, however stronger NIMs and improved price effectivity boosted earnings. Administration expects NIMs to stay steady by monetary yr 2026, with some stress anticipated from a possible decline within the revolver combine and deliberate repricing of the EMI guide, which at present makes up 35% of the portfolio.
In distinction, Morgan Stanley is extra cautious. It has maintained an ‘equal-weight’ score, whereas elevating its goal value to Rs 775 from Rs 685, citing a decrease price of fairness and modest earnings upgrades. It acknowledges the advance in asset high quality metrics—Stage 2 NPAs fell from 5.6% to five.0% and Stage 3 from 3.2% to three.1%—however warns that the long-term credit score price trajectory stays unsure.
The revised ECL (anticipated credit score loss) mannequin has boosted Stage 2 provisioning considerably, whereas Stage 3 protection has been lowered, making the general path to normalised credit score prices unclear.
Morgan Stanley additionally highlights valuation issues, noting that SBI Playing cards trades at 33 occasions FY26e P/E and 25 occasions FY27e P/E, making it one of the costly shares amongst large-cap financials. Even on consensus forecasts, that are about 9% above its personal estimates, the inventory nonetheless trades at 23 occasions FY27e P/E.
Each brokerages agree that credit score price reduction is a step in the fitting course. Nonetheless, whereas Macquarie sees additional upside, Morgan Stanley believes the market could also be overestimating the tempo of restoration.
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