Neutral SBI Cards; target of Rs 625: Motilal Oswal

Key Investment Pillars

Improving credit cost trajectory: Credit cost moderated to 5.6% and the company created an additional provision of INR0.3b to address heightened macroeconomic uncertainty.
Stable NIMs: Management expects NIMs to remain broadly stable despite upward pressure on borrowing costs, as the rise in cost of funds is likely to get offset by the repo rate hike.
Pickup in retail spends and receivables: The company expects a pickup in retail spends and receivables during 2HFY27, supported by the festive season and improved customer engagement.
Corporate spends moderation: Corporate spends are expected to remain below 20% of overall spends, with management prioritizing profitability and margins over incremental corporate volumes.

To validate the thesis, we would watch for:

Stable NIMs despite upward pressure on borrowing costs,
Improving credit cost trajectory,
Pickup in retail spends and receivables, and
Moderation in corporate spends. These signals would indicate that the company is on track to achieve its guidance and that the investment thesis is playing out as expected.