SBI Cards share price hits fresh 52-week high on festive season offers; should you buy?

SBI Cards and Payment Services share price hit a fresh 52-week high of Rs 891.95 apiece on BSE, rising 4.18 per cent on Wednesday. The company on Tuesday, announced festive season offers ranging from fashion and lifestyle to electronics to travel. The stock has surpassed its previous high of Rs 867.50 touched on September 14, this year. The company in a press release said that SBI Card is all set to add to the festive cheer of its cardholders this festive season. Offers are available nationally across marquee brands such as Amazon, Croma, Caratlane, Fabindia, Grofers, Samsung Mobile, Pantaloons and Tata Cliq, among others.

The company informed that the offers include attractive cash backs as well as instant discounts ranging up to 10 per cent. “SBI cards with it’s latest festive offerings are expected to have a very good Q3FY20 as Indian consumers start spending more,” Abhijeet Ramachandran, Independent Analyst/ Co-Founder and trainer at Tips2trade, told Financial Express Online.

SBI Cards has also curated several region-specific and hyperlocal offers for customers across small towns and cities. It has partnered with regional brands during the Durga Puja and Navratri festivals that will enable customers to avail great savings through cashback offers. Further, to ensure affordability, SBI Card customers can avail EMI facility. Ramachandran also added that with a major part of the economy slowly opening up along with the upcoming festive season, demand, in general, has seen a marginal increase across sectors. “Technically, 936-950 could be a potential peak as the stock currently enters the overbought territory. Investors should look to buy near 776-800 levels for longer-term targets of 1050-1190 in the coming months,” Ramachandran said.

Research and brokerage firm Axis Securities has initiated coverage on SBI Cards and Payment Services with a ‘buy’ rating. It has pegged a target price of Rs 1,010, implying an upside of over 13 per cent from today’s high. It noted that with social distancing norms, there is a visible shift towards the use of digital payment modes, especially credit cards. “We believe this preference would be sustainable and drive growth for the industry and SBI Cards alike,” Axis Securities added.

Analysts at Anand Rathi Financial Services in a report of September this year too initiated coverage on the stock with a ‘buy’ rating to it. It has given a target price of Rs 1,021, a potential upside of 14.46 per cent. It said that as the largest pure credit-card issuer, the business model of SBI Cards is sound. It benefits from its parent’s (State Bank of India) largest distribution network (especially on the strategy to expand in smaller towns and cities) and focus on co-branding cards.