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.