Investing in stocks is essentially about investing in businesses. Renowned American investor Charlie Munger famously stated that the true value lies not in the buying and selling of companies but in holding stocks long-term. However, this perspective doesn’t quite align with the experience of investors in the SBI Card IPO. Launched in March 2020 at a price of ₹755, the share price has fluctuated around ₹855 on the NSE over five years, yielding a modest 13% return for those who held onto their shares.

SBI Card IPO Performance Overview

According to insights from the ICICI Direct CAGR calculator, the Compound Annual Growth Rate (CAGR) for SBI Card shares since their listing on both the BSE and NSE stands at just 2.52% annually. This figure falls significantly short—less than half—of the returns that State Bank of India (SBI) fixed deposits (FDs) have provided over the same period.

• SBI FD Interest Rates: At the time of the SBI Card IPO, the interest rate for SBI FDs for tenors of five years or more was 5.70%.
• Special Rates for Seniors: Senior citizens enjoyed an even better deal, with rates climbing to 6.20% per annum post-listing.

Timeline and Details of the SBI Card IPO

The SBI Card IPO made its debut on the Indian primary market from March 2 to March 5, 2025, with shares officially listing on the BSE and NSE on March 16, 2025. The IPO’s total size reached ₹10,354.77 crore, primarily consisting of an Offer for Sale (OFS), where ₹500 crore was allocated for fresh shares and ₹9,854.77 crore for the OFS, indicating that the public offering was largely a means for promoters to divest their stakes rather than to inject capital into the company.

Reasons for Underperformance

Despite the hype surrounding the SBI Card IPO, it faced a disappointing market reception. Avinash Gorakshkar, Head of Research at Profitmart Securities, shared insights on why the IPO didn’t meet investor expectations. He noted that the IPO was priced at a high valuation, and the significant reliance on OFS was a major factor. Investors received little benefit from the net proceeds, as most funds went to the promoters rather than strengthening the company’s balance sheet.

This trend of companies undertaking IPOs primarily for stakeholder offloading is not unique; for instance, similar patterns were observed with the Paytm IPO and Tata Technologies IPO.

Conclusion

Investors looking at the SBI Card IPO have seen limited gains compared to safer investment options like SBI fixed deposits. This case serves as a reminder that sometimes, traditional investment avenues can yield better returns than high-profile stock offerings. As always, conducting thorough research and considering risk factors can help investors make more informed decisions in the ever-evolving market landscape.