The Second-Leading Player in Credit Card Business- SBI Cards and Payment Services has not performed well in the past few periods and has degraded by more than 20% from its All-Time High Levels. What are the reasons behind this fall in stock price and what should shareholders do, let’s discuss this all in this article.
Stock Performance of SBI Cards:
- The stock price of SBI Cards and Payment Services has fallen by around 21% from its All-Time High Level of Rs. 1,165 Cr. to Rs. 921 as of 29th December 2021.
- As per the bear market rule, we can say that this stock is in the bear phase as it has fallen by more than 20%.
- SBI Cards enjoys the second position in the card business with around 19% market share in terms of cards and spending.
Possible Reasons behind SBI Cards Recent Stock Decline:
- SBI Started charging its credit cards customers a fee of Rs. 99 plus taxes on all EMI purchases from December 2021. This processing fee will be charged at merchant outlets, e-commerce websites, and apps when making payments through SBI Credit Cards.
- The market has taken the above news very negatively and the stock price has tumbled by more than 20% from its all-time highs. But financially, there is no such data available to evaluate the impact of these decisions and hence one should wait for the data and results to come out to note the effect of these charge imposition decisions.
- Moreover, currently ‘Buy Now Pay Later’ concept is emerging quite efficiently are there are many start-ups that are active in this space that might give tough competition to the Credit Card businesses. And such steps like imposition of charges, etc can work against the credit card companies and these start-ups can acquire the customers.
What Should Shareholders Do?
As of now, an investor should follow the wait and watch principle, where he/she should look at the impact of this decision on the financials of the company. The Credit Card Industry in India is highly underpenetrated and hence there is ample amount of opportunity available for the credit card company to grow. As of now, this stock price fall looks like a short-term hiccup and nothing more.
Originally Published On: https://blog.investyadnya.in/why-sbi-cards-stocks-price-is-falling/