All you need to know about SBI Cards IPO

All you need to know about SBI Cards IPO
SBI Cards IPO opens on March 02nd 2020 and closes on March 05th 2020. The IPO will have an offer for sale component and a fresh issue component. The total size of the issue is Rs.10,354 crore and post the issue the stake of State Bank of India in SBI Cards will come down from 74% to 69.51%. The issue price band will be Rs.750-755 and at the higher end of the band, the company could be valued at close to Rs.70,000 crore. This is one of the most awaited among upcoming IPOs.

The company management has also been quite excited about it. Take a look at the video below to know the management’s take on the same.

Why SBI cards IPO is beneficial

SBI Cards IPO will give investors an opportunity to invest in the first listed credit card business in India. With a market share of 18% (number of cards), SBI Cards is already the second largest credit card player in India. It runs a profitable business with net margins at a healthy 15%. It is a solid play on the increasing digitization of payments in India and also rising consumption.

What is the amount of the IPO?

The initial public offering of SBI Cards will open on 02nd March and close on 05th March. The IPO has been priced in the band of Rs.750-755. SBI will hive 5.49% of its holdings and the balance will be hived off by Carlyle Group. Out of the total issue size of Rs.10,354, the fresh issue portion will be Rs.500 crore and Rs.9,854 crore will be an offer for sale (OFS). Here are some additional details of the latest IPO from the SBI stable.

  • IPO open from – March - 02nd to March 05th
  • Finalization of basis of allotment – March 11th
  • Demat Credit – March 13th
  • IPO Listing – March 16th
  • IPO Price Band – Rs.750-755
  • Minimum Retail Application – 1 lot = 19 shares at Rs.14,345
  • Maximum Retail Application – 13 lots = 247 shares at Rs.186,485

What is anticipated return?

It is tough to estimate the anticipated returns but being the first of its kind credit card IPO in India, it is likely to elicit interest from retail, HNI and institutional investors. The expected oversubscription and the 15% net margins will ensure a good listing for the stock. Even for a long term investor, SBI Cards will be a good play on the digitization of Indian shoppers and the consumer propensity to spend; especially the millennial consumer.

Benefits to the retailer

One interesting thing to remember is that if you are an existing SBI shareholder, you can apply for a maximum of 247 shares under the shareholder quota and 247 shares in the retail quota. If you are eligible for the employee quota, then you can make a third application under that category also. You can use the same demat account for all these applications. The employee quota offers an additional discount of Rs.75 per share.

How to apply for SBI Cards IPO

You can apply for the SBI Cards IPO either offline or online. Ideally, you can use the ASBA route to apply for the IPO. Application Supported by Blocked Amount (ASBA) allows you to just block the monies without debiting at the time of application. On allotment, only the amount allotted will be debited and the balance amount is released. You can also use the UPI facility to apply for the IPO with select brokers.

The video below will help you know the entire IPO application process.