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Shares of SBI Cards and Payment Services dropped 4% to the day’s low of Rs 718 on Monday after the company released its Q4 results on Friday wherein an 11% year-on-year (YoY) rise in profit after tax to Rs 662 crore for the quarter ended March 2024 was reported.Total revenue rose 14% YoY to Rs 4,475 crore in the fourth quarter of 2023-24, as against Rs 3,917 crore in the year-ago period.Interest income grew 28% YoY to Rs 2,139 crore in Q4 FY24 while the fees and commission income increased by 6% to Rs 2,209 crore in the March quarter, SBI Card said in a statement.The report further added that nearly all the other retail product lines that they follow are not showing these high delinquency ratios, making it harder to understand this divergence.For FY25, the management is guiding a steady growth in card issuances and recovery in corporate credit card spending, which were impacted by the recent guideline wherein there was a ban on specific types of B2B corporate credit card transactions along with a credit cost at approximately 7% levels, which remains flat year on year. Further, they mentioned that there is still some lagged impact on the cost of funds, and they expect that they are closer to the bottom of the NIM profile.Here’s what brokerages say:NomuraAs asset quality woes continue, Nomura expects FY25 to be a difficult year. Profitability is also likely to be under pressure for SBIC for the upcoming year. Hence, Nomura has rated SBIC for ‘reduce’ with a target price of Rs 640.Morgan StanleyThe global brokerage firm rates SBIC as ‘equalweight’ with a target of Rs 750 as Morgan Stanley states that the industry grew at 20% YoY in March 2024 (likely because of the continued impact of RBI’s recent notification on corporate spending) , while SBI Cards’ growth was much slower at 1% YoY. Further, the company's market share also fell YoY and MoM to 15.2% for March 2024.UBSUBS has maintained a ‘neutral’ rating with a price target of Rs 805 as the credit costs continue to remain elevated and retail spending stays strong. The company’s lower opex drove PAT beat while the revolver mix improved slightly.Kotak Institutional Equities“The industry continues to show promising trends as card issuances are healthy and translation into spend growth leading to high RoEs makes this business attractive. However, the performance of SBI Cards has been far-from satisfactory. We do believe that a reversal of the current credit cost cycle could happen, which should aid in a sharp recovery in earnings. Also, interest rates are at peak levels and incremental NIM pressure is likely to be negligible”.KIE maintains a ‘buy’ view on the stock with a target price of Rs 900.ICICI SecuritiesThe company has faced several challenges over the last 4 years including higher credit cost during covid, higher cost to income during BNPL surge, structural decline in revolver mix, higher cost of funds post-covid and a higher cost of funds andcredit cost due to stress in unsecured lending accompanied by the increase in risk weights by the RBI. However, the company has still been able to deliver earnings CAGR of 34.7%/22.8% over the last 3/5 years.Backed by the above, ICICI has maintained its ‘add’ rating on the stock with a target price of Rs 820.InCred EquitiesSBI Cards continued to demonstrate a weak profitability trend amid falling margins and elevated credit costs. Post adverse policy action by the RBI, we expect a slowdown in card issuance and overall spending amid weak capital adequacy & deteriorating asset quality. We also expect its premium valuation to erode with growth slowing & profitability weakening.On these grounds, InCred advises to ‘reduce’ the stock with a target price of Rs 500.Axis SecuritiesThe credit card industry has been dealing with asset quality concerns for the past few quarters, largely driven by customer over-leveraging. To tackle the problem of over-leveraging, SBIC has taken multiple corrective measures and will continue to fine-tune policies and processes. The newly sourced portfolio (45% share of book in Q4FY24) has been continuing to perform better and as the share of this sourcing increases, SBIC is likely to witness portfolio quality improvement. Axis Securities recommends to ‘buy’ the stock with a target of Rs 850.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The pressure is mounting on Aam Aadmi Party's national convenor Arvind Kejriwal's reign as the Delhi Chief Minister as nation's top officials including Delhi High Court and Prime Minister Narendra Modi have criticised him running his office from Tihar jail.PM Modi in an interview to TOI said that he felt "other politicians won't be so lacking in morals.""I think it is the media's responsibility to show the people the full perspective on this (Kejriwal) issue, how people of Delhi are suffering, and what the courts have said about the case," Modi said when asked about a sitting Chief Minister being in jail."I am optimistic that this will not become a precedent. I feel other politicians won't be so lacking in morals and will not go to this extent," Modi said.Kejriwal is currently in Tihar jail amid an ongoing investigation over money laundering allegations in the Delhi Excise Policy scam case. Kejriwal and his party have come down heavily on the Enforcement Directorate for their handling of the case and have accused the Central government of using investigative agencies to cripple the Opposition even as the Lok Sabha elections are ongoing."Political interest over national interest"The Delhi High Court on Friday came down heavily on the city government, saying that Kejriwal's continuation as the CM despite being arrested puts political interest over national interest.The case was about non-supply of textbooks to children studying in MCD schools.The court stated that till now it has "politely" emphasised that national interest is "supreme" but the present case has highlighted what was "wrong" and it would pass an order in the matter on Monday."I am sorry to say you have placed your interest above the interest of the students, the children that are studying. That is very clear and we are going to give that finding that you have placed your political interest at a higher pedestal."It is very unfortunate that you have done this. It is wrong and that is what has got highlighted in this matter," said the bench of Acting Chief Justice Manmohan and Justice Manmeet P S Arora.The court told the Delhi government lawyer that his client is "just interested in appropriation of power"."I don't know how much power you want. The problem is because you are trying to appropriate power, which is why you are not getting power," it said.(With PTI inputs)