In today’s briefing:
- FinTech Playbook: Buy Now Pay Later | De-mystifying the tablestakes
- SBI Cards and Payment Services (Initiating Coverage): Top-of-the-crest play. BUY
FinTech Playbook: Buy Now Pay Later | De-mystifying the tablestakes
We expect regulatory convergence on the back of the RBI’s recent narrative for digital lenders although FinTech BNPLs are likely to sustain their superior user experience. Within a bouquet of BNPL options, credit cards remain the most exhaustive and profitable and, in fact, offer an up-sell opportunity for credit-tested top-of-the-BNPL-pyramid customers. India’s Buy-Now-Pay-Later (BNPL) is positioned as a source of gateway credit and poised to grow to USD56bn by FY26 (~5% of digital P2M payments) on the back of rising ecommerce and digital payments penetration.
SBI Cards and Payment Services (Initiating Coverage): Top-of-the-crest play. BUY
We initiate on SBI Cards with BUY and RI-based target price of INR1,100. SBI Cards and Payment Services (SBI Cards), India’s second largest credit card issuer, has established itself as an enviable franchise, delivering on all fronts (~40% EPS CAGR from FY18 to FY20, ~5-6% RoA, prudent risk management, etc.). With a balanced customer acquisition strategy across open market and banca (SBI), SBI Cards has diversified its revenue streams (fee income at ~50% of total income) to drive earnings, which is poised for a 45% EPS CAGR over FY21-FY24E.
Before it’s here, it’s on Smartkarma