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The much-anticipated SBI Card IPO has finally completed with an issue price of Rs 755 per share, however, market experts feel that the price is too expensive.
The SBI Card IPO demands around 46 times of the price of its latest earnings and a price-to-book ratio of 14.5 times, which according to experts, are on the higher side.
The company, though, has not listed the counterpart in India, American Express, a company which derives a majority of its revenue from services such as credit cards trades with a price which is 17 times of its latest earnings.
SBI Card priced at Rs 755 is around 2.7 times expensive than American Express, according to analysts.
In comparison to a global company such as American Express, which gives good returns to its shareholders with better risk coverage, the issue price fixed for SBI Cards is overvalued, they said.
Around 74% stake in SBI Card is held by State Bank of India and Carlyle Group owns 26% in SBI Card. Carlyle Group is a private equity fund which bought 26% share of SBI Card from a GE Group company at Rs 2,000 crore.
Post-IPO, SBI Card will have 70% stake as its is diluting its shares and Carlyle Group will have 16%, while the new shareholders will get 14 per stake in the credit card company.