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Several brokerages have recently updated their views on SBI Cards and Payment Services following its Q2FY26 results, showing a mix of cautious optimism and concerns over valuation.

As of 12:20 pm, the stock of SBI Cards was trading down by 2.15 per cent at Rs 909, post its Q2FY26 results that the company reported on Friday.

SBI Cards reported mixed Q2 results with net interest income (NII) up by 15.2 per cent year-on-year (YoY), while profit after tax (PAT) increased 10 per cent YoY.

The company's gross non-performing assets (GNPA) improved to 2.85 per cent from 3.1 per cent in the previous quarter, and net NPA (NNPA) eased slightly to 1.3 per cent from 1.4 per cent quarter-on-quarter (QoQ). Net Interest Margin (NIM) remained flat at 11.2 per cent.

Jefferies has maintained a 'hold' rating on SBI Cards, while raising its target price from Rs 960 to Rs 1,010. The brokerage noted that the company's Q2 PAT grew 10 per cent year-on-year (YoY) to Rs 4.4 billion. However, it was 13 per cent below their estimate due to lower net interest margins, weaker fee income, and slightly higher operating expenses.

Jefferies also highlighted that the company's most asset quality metrics improved quarter-on-quarter, indicating that stress in the loan portfolio is easing. Looking ahead, the brokerage expects the credit costs to moderate, and NIM should recover as the revolver mix normalises.

However, modest asset growth and ongoing fee income pressure could limit earnings expansion. As a result, Jefferies has cut its EPS estimates for FY26–27 by 7–14 per cent, noting that while earnings and return on assets should improve, the stock’s valuation of 4.7x FY27 estimated book value already reflects much of this potential upside.

JP Morgan has maintained an 'underweight' rating on SBI Cards, lowering its target price marginally from Rs 830 to Rs 824. The brokerage noted that Q2 FY26 net profit of Rs 4.45 billion, a 10 per cent YoY increase, fell 9 per cent short of their consensus estimate of Rs 4.9 billion.

The shortfall was primarily due to higher operating expenses, which pushed the cost-to-income (C/I) ratio up by 649 basis points quarter-on-quarter to 56.8 per cent, above the brokerage's expected 54.7 per cent.

This increase in expenses was attributed to festive promotional campaigns in late September, a higher share of corporate spending (rising to 16.3 per cent from 11.6 per cent in Q1 FY26), and a Rs 0.3 billion provision for a pending stamp duty issue related to a June 2019 amalgamation.

On a positive note, asset quality metrics remained encouraging, with loan losses at Rs 12.9 billion, slightly below expectations, and annualised slippages declining to 9.1 per cent from 9.5 per cent in the previous quarter, signalling a gradual improvement in credit health.

Morgan Stanley has maintained an 'underweight' rating on SBI Cards and lowered its target price from Rs 710 to Rs 700. The brokerage highlighted that Q2 results continued to miss expectations, with earnings and performance weaker than anticipated, and noted that the stock’s valuation appears steep.

The brokerage believes that market projections for credit costs and earnings are overly optimistic, and pointed out structural risks to the company’s growth trajectory, return on equity (ROE), and the potential for market-driven de-rating.

CLSA has maintained a reduced rating but raised its target to Rs 820 from Rs 800.

Macquarie has maintained a 'neutral' rating on SBI Cards with a target price of Rs 990. The brokerage noted that the Q2 PAT missed expectations due to higher operating expenses, and highlighted that investors are closely watching the company’s credit cost trajectory.

The brokerage expects the net interest margins (NIM) to improve in the coming quarters, which could support profitability. However, Macquarie also pointed out that the stock appears expensive, at 4.5x FY27 estimated price-to-book for an expected return on assets (ROA) of 3 per cent in 1HFY26.

Currently working as a trainee Sub-Editor at Zee Business, Shristi Rani is passionate about storytelling and delivering content that engages diverse audiences across digita