sbi cards faces downgrades amid weak q2 results and tough outlook

SBI Cards' stock has experienced a 3% decline after disappointing Q2 results, leading to downgrades from brokerages.

Nomura has given a 'reduce' rating with a target price of Rs 625 per share, suggesting a potential further downside of 6%. The firm expects a challenging FY25 for SBI Cards and believes that only a policy rate cut could improve profitability. Operational weaknesses and low card additions in the second quarter have contributed to this outlook.

HSBC has also downgraded SBI Cards to a 'reduce' rating and lowered its target price to Rs 580 per share. Analysts attribute the decline in earnings to subdued new card issuance and a low share of earnings assets. The management's lack of clear guidance on asset quality recovery is also a concern. HSBC has revised its FY25 estimated earnings per share (EPS) down by 25% due to high credit costs and uncertainty regarding the timing of any earnings recovery.

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