Have you ever heard the name John Biggins? Probably not, he is the master mind behind the cards we use in our day to day life. He invented the first bank issued credit card in 1946. You might be thinking why I am talking about credit cards today.
We have an IPO tomorrow for SBI card. IPO stands for Initial Public Offering. Why does a company go public? Probably the existing investor might have found a better investment, or the company needs liquid for expansion. There may be other reasons too. SBI card is a subsidiary of SBI (State Bank of India). SBI cards is the second largest card issuer in the credit card segment, first being HDFC bank.
Is SBI card a good buy?
Per my conviction, the credit card market in India is still not well developed. Very few Indian’s use credit card (around 60 million, less than 6% of India’s population). The government has been pushing for the digitalization. Plastic cards are major push to digital economy. Its main competitor apart from other banks are the UPI based apps like PhonePe, GPay, PayTM. The revenue from credit card products consists primarily of interest on credit card receivables and non-interest income primarily comprising of fee-based income such as interchange fees, late fees, annual credit card membership fees and other fees. The more users SBI will be able to gain in long run, the more valuable its stock will be. I see it as a good buy based mainly because of its parent company SBI. SBI is having a good hold in the market, with around 44 crore accounts.
Is it easy to buy in an IPO?
Buying in IPO is sheer luck. If you are a high net worth individual (HNI), the chances are more. I didn’t have luck by my side in the past IPO’s. If you want to participate in IPO, you must be registered in one of the brokerage firm. Zerodha being the most popular with millennials.
Happy Monday :)
Disclaimer: This is my opinion, I request you to do your analysis before you buy. The image has been taken from here