The much-awaited and talked about IPO of 2020 – SBI Cards IPO opened on 2nd March 2020. The IPO has a lot of good reviews and is expected to be oversubscribed.

Maximising returns in such IPO’s requires a certain process to be followed, which is mostly not told by many platforms or tools. This process is based around smartly managing the allotment and listing day of IPO.

Let’s deep dive on the basic details and key advantages of SBI Cards.

Snapshot of IPO

  • IPO Price – ₹750 – ₹755
  • Minimum Buying amount – ₹ 14,345
  • Investment Horizon – Short-Term (no more than 15 days)

Issue Details

Currently, the SBI group is holding 74% and CA Rover Holdings (26%) equity of SBI Card. With this issue, SBI Card is looking for a market cap of approx. ₹70890 cr.

Retail investors:  The company has reserved 4.27 cr. no. of shares for this category, meaning it expects to raise up to ₹3,229.98 crores from retail investors.

As many as 22,51,641 lots are up for grabs in this category. Each Lot has 19 shares.

SBI Bank Shareholders: 1.3 cr. no. of shares are reserved for SBI shareholders. But no discounts are given for this category.

A retail investor can apply for a maximum of 14 lots as the upper limit of the investment is capped at Rs 2 lakh as per regulations.

SBI Cards IPO Key Advantages

 
  • In high demand. 
  • Only listed Credit card business.
  • SBI has the 2nd largest market share in the cards business.
  • 4th Largest IPO ever. – Aims to raise ₹10,294- ₹10,355 Crs.
  • SBI is the largest lender in the country.

Note: Amid volatile markets, funds get concentrated in quality stocks. Hence, demand can be high. But wait for subscription numbers to invest.

Growth of SBI Cards Business

According to the RBI, SBI Card has grown its business faster than the Indian credit card market.

From 31 March 2017 to 31 March 2019, SBI Credit card spends grew at a 54.2% CAGR vs Overall credit industry grew at 35.6% CAGR, according to the RBI.

SBI Cards Company Return

Returns ratios of SBI Cards are superior with return on assets (RoA) of 5.5% and return on equity (RoE)of 30%.

Applying for Subscription

Action Day

IPO performance largely depends on oversubscription stats.

The retail category of the issue has been subscribed to 1.79 times and overall the issue has been subscribed over 15.50 times. With these many subscriptions, it is advised that any investor should invest half of the capital set aside for this IPO, and the rest half should be invested after IPO gets listed on 16th March depending upon how it behaves.

On Listing day – 16th March 2020 

 

 

Listing Day Trade

If the stock price rises sharply, then be cautious and sell to book profits.

Otherwise, if the stock price falls or stays the same, then sell to cut losses.

Conclusion

In the past, IPOs that outperformed had good management, bright business metrics, and ample growth runway. SBI Cards have these traits.

As aforementioned, SBI cards will be the only listed cards business. This has a scarcity value attached to it.

Even so, it makes good sense to invest. The valuations are steep, meaning investors might be overestimating the expected earnings capacity.

Pro-Tip 

Do not invest more than ₹2 Lakhs. Even through multiple accounts.

If you use an amount that is greater than ₹2Lakhs, then you might get an Income Tax notice. As individuals trading for more than ₹2Lakhs is considered as High Net-Worth Individuals. 

How to Apply For IPO through UPI on Zerodha Account

You can apply for an IPO through UPI from your Zerodha account.

All you need is an active trading account with Zerodha.

Step 1: Log in to your Console (Zerodha) Account.



Step 2: Select ‘IPO’ in the ‘Portfolio Menu’.

Zerodha – Console Step 2

Step 3: Select the IPO you want to apply for. (In this case SBI Cards). After selecting the company, you’ll see the details of the offer.

Zerodha – Console Step 3

Step 4: Enter your UPI ID and click verify.

Step 5: Place your bids in the columns.

Step 6: Click on the checkbox and then on ‘Submit’.

Zerodha – Console Step 4

Note: You can apply for the IPO between 10 am to 5 pm on a trading day.

How to Apply For IPO through SBI Netbanking 

Step 1: Log in with your credentials.

SBI Securities-Applying for IPO Step 1
SBI Securities-Applying for IPO Step 1

Step 2: Click on the ‘e-services’ tab.

SBI Securities-Applying for IPO Step 2

Step 3: Click on the ‘Demat & ASAB Services’ tab.

SBI Securities-Applying for IPO Step 3

Step 4: Click on the ‘IPO (Equity)’ tab.

SBI Securities-Applying for IPO Step 4
SBI Securities-Applying for IPO Step 4

Step 5: After reading T&Cs. Click on the ‘Accept’ tab.

SBI Securities-Applying for IPO Step 5

Step 6: Select the IPO you wish to apply for. 

SBI Securities-Applying for IPO Step 6

Step 7: After reading the letter. Click on ‘Accept’ tab

SBI Securities-Applying for IPO Step 7

Step 8: Select Investor Category. Then select ‘add applicant’. 

SBI Securities-Applying for IPO Step 8

Step 9: After selecting ‘add applicant’. Then a new window opens. Select the ‘Name of the applicant’.

SBI Securities-Applying for IPO Step 9

Step 10: Once an applicant is added. The place for bids with the price and lot size details. Later, Click on ‘Submit’.

SBI Securities-Applying for IPO Step 10

Step 11: Application for IPO is successful. 

SBI Securities-Applying for IPO Step 11

SBI Online Portal IPO Guide. 

Important Note 

You will find similar options with other banks like AXIS, KOTAK, HDFC and ICICI which have ASBA facilities. If you are using any other bank, kindly check the ASBA facility with your bank directly. 

If your trading account is with any other brokerage company, please connect with their support team to get your Demat account details. 

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