Why Is SBI Cards’ Market Share Declining Despite Rate Cuts?

SBI Cards’ market share has declined despite healthy retail spend. Motilal Oswal maintains a Neutral rating, expecting moderate loan growth and steady margins through FY28.

Why Is Motilal Oswal Cautious on SBI Cards Despite Healthy Retail Spending?

About SBI Cards and Its Market Context

SBI Cards and Payment Services, India’s second-largest player in the card industry, commands 19.1 per cent share in card-in-force (CIF) and 16.6 per cent share in overall industry spends. However, its market share in spending has gradually declined over the years due to moderation in corporate spends and rising competition from fintech and private issuers.

Motilal Oswal’s Latest Assessment

Motilal Oswal Securities maintains a Neutral stance on the stock with a target price of ₹950 (CMP ₹920). Analysts highlight that while retail spends have shown resilience, overall growth remains moderate amid tighter credit policies and intense competitive pricing.

SBI Cards has benefited from recent rate cuts, leading to a 30 bps decline in cost of funds (CoF). Analysts believe further reduction is possible if rates continue softening. Yet, given the near-term inflation pressures, the overall cost of credit is expected to stay elevated.

According to Motilal Oswal, the easing credit cost and improving return ratios could still provide incremental tailwinds. They foresee a possible improvement in RoA to 3.8 per cent in FY26, 4.6 per cent in FY27, and 4.8 per cent in FY28, with steady recovery in card spending trends.

To stay updated with evolving market sentiment and index moves, readers can check the latest Nifty Tip insights curated by our in-house analysts.

Projected Growth and Loan Outlook

Motilal Oswal expects spends to clock an 18 per cent CAGR between FY25–FY28, while loans are likely to grow by around 15 per cent CAGR during the same period. This forecast assumes continued pickup in consumer spending and limited disruption from digital credit products.

While these estimates appear strong, the brokerage warns that SBI Cards’ growth will hinge on consumer confidence and stable macroeconomic indicators. The improvement in margins and return ratios will depend heavily on how effectively SBI Cards manages risk in its retail lending book.

For those following the broader index momentum, our market specialists also share strategic insights through the Bank Nifty Tip section, updated regularly with expert interpretations.

Investor Takeaway

Indian-Share-Tips.com Technical Analyst Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that while SBI Cards retains strong franchise value and customer base, the near-term upside appears limited due to pressure on margins and spending share. A gradual improvement may follow once consumer credit normalizes.

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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.

Motilal Oswal, SBI Cards, Neutral Rating, Card Industry, Loan Growth, Retail Spend, Nifty Tip, Bank Nifty Tip, Indian-Share-Tips.com, SEBI Registered Investment Adviser