The SBI Card IPO
| Case Code: FINC180 Case Length: 13 Pages Period: 2020-2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.300 Organization: SBI Cards and Payment Services Limited Industry: Credit Card Countries: India Themes: IPO , Going Public |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
A Note on SBI Card
In May 1988, SBI and GE Capital formed a joint venture to start SBI Card as SBI Cards and Payment Services Private Limited. In October 1988, SBI Card got RBI permission to start a non-deposit-taking Non-Banking Financial Company (NBFC)..
Financial Performance of SBI Card
SBI Card’s revenue increased from Rs. 34.71 billion in fiscal 2017 to Rs. 72.87 billion in fiscal 2019. Similarly, net profit also increased from Rs. 3.73 billion in fiscal 2017 to Rs. 8.63 billion in fiscal 2019. The weighted average Earning Per Share (EPS) in three fiscal years from 2017 to 2019 was 7.97 and the weighted average Return on Net Worth (RoNW) was 24.67%..
Details of SBI Card IPO
After getting approval from the board of directors, shareholders, and the Securities and Exchange Board of India (SEBI), SBI Card came up with an IPO, which opened for subscription on March 2, 2020, and closed on March 4, 2020, for the QIB category and on March 5, 2020, for all other categories of investors..
Objectives of the Offer
The SBI Card IPO consisted of an Offer of Sale and a Fresh Offer. The company would not receive any proceeds from the Offer of Sale..
Basis for Offer Price
SBI Card and the selling shareholders had decided on the offer price after consultation with various BRLMs and after consideration of various qualitative and quantitative factors..
Investors’ Response
On March 2, 2020, on the first day of the SBI Card IPO being open for subscription, there was a lukewarm response from the investor community. But, on the second day, the portion reserved for retail investors and employees was oversubscribed..
Issue Proceeds
Through the book-building process, the price of a share was fixed at the upper end of the price band at Rs. 755, including a share premium of Rs. 745. The total IPO expenses were Rs. 1.39 billion..
Market Response
SBI Card set the listing date as March 16, 2020. Experts believed that this issue would give a good listing gain to the investors as in the grey market it was traded in the range of Rs. 830 - Rs. 855, a premium of 10% to 13%..
SBI Card IPO: A Year Later
After initial hiccups due to overall negative market sentiments, the SBI Card stock performed well, especially after August 3, 2020..
Exhibits
Exhibit I: Market Share of Leading Credit Card Players in FY19
Exhibit II : Various Ratios of India Credit Card Industry
Exhibit III : Financial Summary of SBI Card
Exhibit IV: Selected Cash Flow Items of SBI Card
Exhibit V: Important Dates of SBI Card IPO
Exhibit VI:
Basis for Offer Price
Exhibit VII: Day to Day Subscription Details of SBI Card IPO
Exhibit VIII: Estimated IPO Expenses
Exhibit IX:
Shareholding Pattern of SBI Card
Exhibit X: Movement of Nifty 50 from January 1, 2020 to May 26, 2021
Exhibit XI: Movement of SBI Card Share Price from March 16, 2020 to March 15, 2021
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