PLASTIC CURRENCY MARKET AND THE UPCOMING SBI IPO

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India has primarily been a debit card market, with more than 824 million cards in the system. But over the last few years, the growth in the number of active credit card users have seen a steep rise, which can be owed to the increasing digital payment interfaces that have come up in the recent time.

According to data sourced from the RBI, Credit cards in circulation in India touched 48.9 million in May from 38.6 million. This 27% growth has thrown up new business opportunities. Credit card spends in FY19 amounted to Rs 6 trillion, registering a 32% CAGR over the last 5 years and these spending are expected to multiply by 2.5 times (15 Trillion) by 2024.
Last year, HDFC Bank had issued 12 million credit cards, while State Bank of India has more than 8.7 million cards in the system, followed by ICICI Bank and Axis Bank.
Incorporated in 1998, SBI Cards is the second-largest credit card issuer in India, with an 18 percent market share of the credit cards market in terms of the number of cards outstanding and at this point of time, when the credit card industry is eyeing a rise, SBI Cards and Payment services (SBICPS), subsidiary of SBI, filed its DRHP (Draft Red Herring Prospectus) with SEBI for its upcoming IPO, which would be open for subscription from 2-5 March 2020.

About 10 percent of the issue is going to be reserved for SBI shareholders.
The price band expected for this share is Rs.750-755, according to the market sources.

The equity share capital of the company as on the date of filing the DRHP is worth 93.23 Cr shares of Rs 10 each.

74% of this or 68.99 Cr shares is held by SBI (which is the promoter) and 26% or 24.24 Cr shares by CA Rover Holdings.

Most market participants expect the issue to see strong oversubscription. And the grey market premium is expected to rise further in the runup to the issue.
“It will be a multibagger stock. If you get it, keep it in your portfolio forever. It is a must buy. The IPO will unlock its true value, which was seen in the case of IRCTC, which was highly undervalued,” a firm researching on unlisted IPOs quoted.