Motilal Oswal - MOSL: Morning India (13/December/21): 1. SBI Cards and Payment Services (Review of digital payment charges poses an overhang); 2. Telecom; 3. EcoScope

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MOSL: Morning India (13/December/21): 1. SBI Cards and Payment Services (Review of digital payment charges poses an overhang); 2. Telecom; 3. EcoScope

Morning India (13/December/21): 1. SBI Cards and Payment Services (Review of digital payment charges poses an overhang); 2. Telecom; 3. EcoScope

Today’s top research idea

SBI Cards and Payment Services: Review of digital payment charges poses an overhang

RBI proposed to issue a discussion paper to cover aspects related to charges involved in various digital payment modes covering Credit Cards, Debit Cards, PPIs, UPIs, etc. SBICARD has thus corrected ~9% over the past two days on fears of a reduction in MDR charges, which can adversely impact profitability. SBICARD's spend-based fee constitutes 45-54% of total fees and corresponds to 18-23% of total revenue.
As per our sensitivity analysis, we estimate 8-17% earnings impact in case MDR on Credit Cards is reduced by 10-20%. As the company mitigates this impact by effecting a reduction in payment processing charges, cost of reward points, and the interest free payment period to customers, the earnings hit could be shielded by 5-12%. This would limit the RoA/RoE damage to ~21-37bp/87-155bp.
After a 9% decline in the stock price, it is now trading at 23x FY24E earnings, which appears attractive. Any reduction in MDR charges will be critical to earnings, keeping us watchful in the near term.

Piping hot news

Bank deposit insurance cover upped to Rs 5 lakh, refund in 90 days: Goyal

Union Minister of Commerce and Industry Piyush Goyal on Sunday said that the Central government has increased the bank deposit insurance cover, in case of problems occurring such as closure, from Rs 1 lakh to Rs 5 lakh. The amount has to be refunded to the depositor within 90 days.

13/12/2021 20 EN

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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MOSL: Morning India (13/December/21): 1. SBI Cards and Payment Services (Review of digital payment charges poses an overhang); 2. Telecom; 3. EcoScope

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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