1. At a Glance
SBFC Finance, the NBFC darling for MSME and gold-backed loans, saw its stock slide 4.4% as Q1 numbers dropped. Despite the dip, profits jumped 28% YoY, and AUM continues to grow like a weed on steroids. Market cap? ₹11,918 crore. P/E? 32x. Investors? Nervous.
2. Introduction with Hook
Think of SBFC as the friendly neighborhood loan shark — but with SEBI’s blessings. It feeds MSMEs with cash and takes gold as collateral, because trust issues. In five years, it grew profits at 58% CAGR. Yet, the stock behaves like it just heard RBI whisper “rate hike.”
3. Business Model (WTF Do They Even Do?)
- Lends to MSMEs, secured against property.
- Offers gold loans, because Indians love bling.
- Targets underbanked borrowers with decent credit risk management.
Basically, they hand out money where banks hesitate, and charge for the courage.
4. Financials Overview
Q1 FY26 Snapshot:
- Revenue: ₹388 crore (+31% YoY)
- Net Profit: ₹101 crore (+28% YoY)
- NIM: 36% (consistent)
- GNPA: 2.78%, NNPA: 1.57%
Margins remain solid. Asset quality is holding, but NPAs are inching up like rent in Mumbai.
5. Valuation
- P/E 32x, expensive for an NBFC with ROE of 12%.
- P/BV 3.7x, investors paying premium for growth hype.
Fair Value Range: ₹90 – ₹105.
If you think 3.7x book is cheap, you probably buy airport sandwiches without blinking.
6. What’s Cooking – News, Triggers, Drama
- ₹3,000 crore NCD fundraise approved in April 2025.
- Focus on women entrepreneurs with ₹400 crore funding push.
- Credit rating upgraded to AA-, helping lower borrowing costs.
- Voluntary liquidation of SBFC Home Finance — housekeeping much?
7. Balance Sheet
| Particulars (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 8,596 |
| Liabilities | 3,332 |
| Net Worth | 3,190 |
| Borrowings | 5,264 |
Debt-heavy? Yes. But hey, it’s an NBFC — leverage is their middle name.
8. Cash Flow – Sab Number Game Hai
| Year | Ops | Invest | Finance |
|---|---|---|---|
| FY23 | -1,245 | 206 | 1,071 |
| FY24 | -1,155 | 158 | 1,037 |
| FY25 | -1,415 | 176 | 1,281 |
Operating cash flow is a red flag (negative every year). They borrow to lend. Classic NBFC story.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 12% |
| ROCE | 11.6% |
| P/E | 32x |
| GNPA | 2.78% |
| D/E | 1.7 |
ROE barely in double digits, while valuations scream premium. Investors, take a seat.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | Financing Profit | PAT |
|---|---|---|---|
| FY23 | 734 | 209 | 150 |
| FY24 | 1,019 | 329 | 237 |
| FY25 | 1,305 | 475 | 345 |
Analysis: Growth is spicy, but cost of funds and asset quality will decide if this curry burns later.
11. Peer Comparison
| Company | Rev (₹Cr) | PAT (₹Cr) | P/E |
|---|---|---|---|
| Bajaj Finance | 73,107 | 17,425 | 33x |
| Shriram Fin | 43,778 | 8,508 | 14x |
| SBFC Finance | 1,396 | 367 | 32x |
SBFC is the new kid charging premium like it’s already Bajaj Finance. Spoiler: It’s not there yet.
12. Miscellaneous – Shareholding, Promoters
Promoter holding is sliding (53.2% now, down from 64%). FIIs creeping in (7.1%), DIIs holding 17%, retail at 22%. Falling promoter stake + rising institutional interest = mixed vibes.
13. EduInvesting Verdict™
SBFC Finance is a growth rocket fueled by MSME dreams and gold bling. But leverage is high, cash flows negative, and NPAs creeping. Stock is priced like it’s the next Bajaj Finance, but reality check: it’s still in coaching class. Watch closely.
Written by EduInvesting Team | 26 July 2025
Tags: SBFC Finance, NBFC, Q1FY26 Results, EduInvesting Premium, MSME Loans, Gold Loans, Financial Services
