The Rs 9,500 crores IPO (Initial Public Offering) of SBI Cards and Payments Service is likely to be launched in the 1st week of March, according to bankers to the issue. Market regulator SEBI (Securities and Exchange Board of India) on Tuesday has given its in-principal approval to launched SBI Cards IPO, they said.
IPO is likely to be priced in binds 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% over its likely IPO price. SBI Cards is likely to be valued at Rs 60,000 crores in the IPO, including valuations 41 times FY20 annualized earnings per share as against 9-18 times of global peers.
Pankaj Agarwal the analyst of Ambit Capital said, “Expected valuations of 12 times FY2020 estimated price to book is 243%premium to the US credit card companies like Amex or Discovery, despite similar return on equity. However, higher earnings growth of 41% plus for SBI Cards vs 16-19% growth for Amex or Discovery should command a higher premium over US card companies”.
Parent State Bank of India added a record of 3.6 lakhs 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 opportunity of getting allotment in this category may be higher than that in the general retail category, said brokers.
According to the DRHP(Draft Red Herring Prospectors), the company will offer up to 13.05 crores equity shares via the offer for sale route.