Stock To Sell: Holding this finance stock? Morgan Stanley sees steep fall ahead, slashes target — Check details

Stock To Sell: If you hold this popular finance stock in your portfolio, it may be time to take a closer look. Global brokerage Morgan Stanley has struck a cautious note, warning that the share could face meaningful downside in the coming months. Despite the festive season, when spending usually peaks, the brokerage says growth in the credit card business has failed to show any real pick-up. In its latest note, Morgan Stanley has reiterated its ‘Underweight’ stance and cut the target price to Rs 700, flagging risks to earnings momentum and valuation. With the stock currently trading around Rs 866, the call implies a potential downside of nearly 20 per cent.

Morgan Stanley stays cautious on SBI Cards

The stock under the scanner is SBI Cards and Payment Services. Morgan Stanley has maintained its ‘Underweight’ rating, indicating that it expects the stock to underperform peers and the broader market. The brokerage believes that current valuations do not fully reflect the slowing growth environment and rising competitive pressures in the credit card space. At the current market price of about Rs 866, the revised target of Rs 700 suggests a downside of around 15–20 per cent.

Festive spending fails to lift growth

One of the key concerns highlighted by Morgan Stanley is the lack of a festive boost in credit card spending. Traditionally, the months around major festivals see a sharp rise in consumer purchases, driven by discounts, travel and big-ticket buys. However, data analysed by the brokerage shows that spending growth has remained largely flat even after the festive period. Year-on-year growth stood at around 15 per cent between April and August 2025, but post-festival numbers have slipped slightly to about 14 per cent. For the brokerage, this signals that demand is not accelerating in the way the market had hoped.

September spike looks short-lived

Morgan Stanley noted that whatever strength was visible recently came mainly from the last week of September. That brief jump was driven by a mix of factors such as large e-commerce sales, the start of Navratri and the impact of GST rate cuts on select items. But the brokerage does not see this as a sustainable trend. It believes the spike was event-led and unlikely to translate into a stronger growth trajectory for the rest of the year.

Why the ‘Underweight’ call remains?

In market parlance, an ‘Underweight’ rating means investors are advised to hold less of the stock compared with its weight in benchmark indices or sector peers. Morgan Stanley argues that industry growth is settling back to its earlier range of 14–15 per cent, with no clear triggers for a re-rating in the near term. With competition intensifying and consumer spending showing signs of fatigue, the brokerage sees limited upside for margins and earnings over the next few quarters.

Target cut to Rs 700

By cutting the target price to Rs 700, Morgan Stanley has effectively warned investors to brace for a possible correction. From the current level of around Rs 866, this represents a meaningful downside and reflects the brokerage’s view that expectations embedded in the stock price are too optimistic. For investors who entered at higher levels, this could mean a tough phase ahead unless business momentum improves sharply.

Disclaimer: The views, suggestions and recommendations expressed in this article are solely those of investment experts. Zee Business advises readers to consult their financial advisers before taking any investment decision.