SBI Cards & Payment Services Ltd Valuation Shifts to Very Expensive Amid Market Pressure

Valuation Metrics Signal Elevated Pricing

The latest data reveals that SBI Cards currently trades at a P/E ratio of 35.41, a level that places it firmly in the 'very expensive' category. This is a significant increase compared to its previous valuation grade of 'expensive'. The price-to-book value stands at 5.01, further underscoring the premium investors are willing to pay for the company’s equity. Other valuation multiples such as EV to EBIT (22.84) and EV to EBITDA (22.41) also reflect elevated pricing, consistent with a high-growth NBFC stock.

When benchmarked against peers, SBI Cards’ valuation remains high but not the most stretched. For instance, Billionbrains trades at a P/E of 56.58 and ICICI Pru Life at 67.63, both classified as very expensive. However, SBI Cards’ PEG ratio of 15.54 is markedly higher than ICICI Lombard’s 4.41 and ICICI Pru Life’s 1.68, suggesting that the stock’s price growth may not be fully supported by earnings growth expectations.

Financial Performance and Returns Contextualise Valuation

Despite the lofty valuation, SBI Cards’ return metrics present a mixed picture. The company’s return on capital employed (ROCE) is 8.47%, while return on equity (ROE) stands at 14.14%. These figures indicate moderate efficiency in generating profits from capital and equity, but they do not fully justify the premium multiples.

Examining stock returns relative to the Sensex over various periods highlights the challenges faced by SBI Cards. Over the past week, the stock outperformed the Sensex with a 1.59% gain versus the benchmark’s 0.98% decline. However, over longer horizons, the stock has underperformed significantly. Year-to-date, SBI Cards has declined by 9.69% compared to a 2.08% drop in the Sensex. Over one year, the stock fell 8.61% while the Sensex gained 9.81%. Even over three years, the stock’s 2.51% return pales in comparison to the Sensex’s 36.80% rise. The five-year return is particularly stark, with SBI Cards down 23.96% against the Sensex’s 61.40% appreciation.

Price Movement and Market Capitalisation

At the current price of ₹778.20, SBI Cards is trading closer to its 52-week low of ₹725.55 than its high of ₹1,023.05, reflecting recent market volatility and investor caution. The previous close was ₹771.25, with intraday trading ranging between ₹761.50 and ₹786.55. The company’s market cap grade remains low at 2, indicating a relatively modest market capitalisation compared to larger NBFC peers.

The stock’s Mojo Score has deteriorated to 46.0, resulting in a downgrade from a 'Hold' to a 'Sell' rating as of 15 Feb 2026. This downgrade reflects concerns over valuation stretchedness and subdued financial returns, signalling caution for investors considering fresh exposure.

Peer Comparison Highlights Valuation Extremes

Within the NBFC sector, SBI Cards’ valuation multiples are elevated but not the most extreme. Billionbrains and ICICI Pru Life exhibit significantly higher P/E ratios, while companies like REC Ltd and Bajaj Housing maintain more reasonable valuations with P/E ratios of 5.47 and 29.72 respectively. This disparity suggests that while SBI Cards is expensive, it is not an outlier in a sector where growth expectations have driven valuations to lofty levels.

However, the PEG ratio of SBI Cards at 15.54 is a notable outlier, indicating that the stock’s price growth is not well supported by earnings growth forecasts. This contrasts with ICICI Lombard’s PEG of 4.41 and ICICI Pru Life’s 1.68, which imply more balanced valuations relative to growth.

Dividend Yield and Profitability Metrics

SBI Cards offers a modest dividend yield of 0.32%, which is relatively low for investors seeking income from NBFC stocks. The company’s ROE of 14.14% is respectable but not outstanding, especially when juxtaposed with its high valuation multiples. ROCE at 8.47% suggests moderate capital efficiency but does not fully justify the premium pricing.

These profitability metrics, combined with the elevated valuation, suggest that the market is pricing in significant future growth and operational improvements. However, the recent negative returns relative to the Sensex and peers raise questions about the sustainability of such optimism.

Historical Performance and Market Sentiment

Over the medium to long term, SBI Cards has struggled to keep pace with the broader market. The five-year return of -23.96% starkly contrasts with the Sensex’s 61.40% gain, highlighting underperformance. The three-year return of 2.51% also lags well behind the Sensex’s 36.80% rise. This underperformance, despite the company’s leadership position in the credit card and payments space, may reflect concerns about credit risk, regulatory pressures, or competitive dynamics.

In the short term, the stock has shown some resilience, with a 1.59% gain over the past week against a Sensex decline of 0.98%. However, the one-month and year-to-date returns remain negative, indicating that investor sentiment remains cautious.

Conclusion: Valuation Premium Warrants Caution

SBI Cards & Payment Services Ltd’s shift to a very expensive valuation grade signals that investors are paying a significant premium for growth expectations. While the company remains a key player in the NBFC sector with solid market positioning, its elevated P/E, P/BV, and PEG ratios, combined with subdued returns and moderate profitability metrics, suggest that the stock’s price attractiveness has diminished.

Investors should weigh the risks of stretched valuations against the potential for operational improvements and sector growth. The recent downgrade to a 'Sell' rating by MarketsMOJO reflects these concerns, advising caution and consideration of alternative investment opportunities within the NBFC space or broader market.

Key Financial Snapshot of SBI Cards & Payment Services Ltd

• Current Price: ₹778.20
• 52-Week High / Low: ₹1,023.05 / ₹725.55
• P/E Ratio: 35.41 (Very Expensive)
• Price to Book Value: 5.01
• EV to EBITDA: 22.41
• PEG Ratio: 15.54
• Dividend Yield: 0.32%
• ROCE: 8.47%
• ROE: 14.14%
• Mojo Score: 46.0 (Sell)

Given these metrics, investors should carefully analyse valuation relative to growth prospects and consider the broader market context before committing capital to SBI Cards.

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