Should investors buy, sell or hold SBI Cards after Q3 results?

Its return on average assets (ROAA) rose to 5 percent during the quarter under consideration, as compared to 3.3 percent in the same period last year. ROAA allows analysts to assess the profitability of a company's assets.

Credit Suisse has cut the target price on SBI Card from Rs 1,350 to Rs 1,100 given slower net interest margin (NIM) recovery. It has cut the earnings per share estimates by 14, 8, and 6 percent for FY22, FY23, and FY24, respectively. While it posted strong growth in spending, the brokerage said, the share of revolvers remains low.

A revolver is a borrower who carries a balance from month to month using a revolving credit line. SBI Cards’ revolvers were 27 percent for the third quarter, same as the previous quarter, but down from the first quarter when it came in at 29 percent.

Plus, overhang remains from potential RBI regulations on credit card merchant discount rate (MDR). The RBI has in its discussion papers talked about revisiting various charges across digital payment modes such as debit and credit cards.

Morgan Stanley has an 'overweight' call on the stock with a target price of Rs 1,300, adding that it sees "downside risks to our forecasts." The brokerage noted that adjusted profit before tax is 22 percent below estimates owing to higher provisions and expenses, but there is an improvement across metrics.