🧠 At a Glance
SBFC Finance is a rising NBFC star targeting secured MSME loans and loans against gold, with a scorching 5-year PAT CAGR of 58%. It’s expanding rapidly across India and boasts a 46% AUM growth rate from FY19 to H1FY25. But with a valuation at 3.8x book and 35x earnings, is this stock the next Bajaj Finance… or just another high-speed bullet in a crowded NBFC highway?
1. Introduction with Hook
NBFCs in India are like street food vendors — too many, all selling the same thing, and most flame out.
But SBFC Finance wants to be the Tunday Kababi of NBFCs — small ticket, high repeat value, loyal customer base, and predictable margins.
Their USP? Focusing on secured MSME lending, something legacy banks hate doing.
2. WTF Do They Even Do? (Business Model)
SBFC = Secured lending to underserved Bharat
🧾 Product Lines:
- 💼 MSME Secured Loans (main biz)
- 🪙 Loans Against Gold (small share)
🏪 Average Loan Size: ₹3–4 lakh
📍 Branches: ~180 across Tier 2 & Tier 3 India
🔐 Focus: High-yield, low-ticket, secured borrowers with stable incomes
👀 Asset Mix:
- ~90% Secured MSME loans
- ~10% Gold loans
Borrowers are GST-paying, thin-file customers — ignored by big banks, but not bad quality.
3. Financials – Profit, Margins, Growth
SBFC is growing faster than most FinTechs — and actually profitable.
| Year | Revenue (₹ Cr) | PAT (₹ Cr) | Net Margin % | ROE % |
|---|---|---|---|---|
| FY21 | 510 | 85 | 17% | 8% |
| FY22 | 529 | 65 | 12% | 5% |
| FY23 | 734 | 150 | 20% | 10% |
| FY24 | 1,019 | 237 | 23% | 11% |
| FY25 | 1,305 | 345 | 26% | 12% |
📈 EPS jumped from ₹0.77 (FY22) to ₹3.18 (FY25)
4. Valuation – Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹111 |
| P/E | 34.9x |
| Book Value | ₹29.4 |
| P/B | 3.77x |
| ROE | 11.6% |
📌 Expensive by NBFC standards, especially with ROE still below 13%.
🧮 Fair Value Estimate (FY26E EPS ₹4.2–4.5):
- At 20–25x P/E → ₹84 – ₹113
👀 CMP is already at the upper band. Margin of safety? Thoda kam.
5. What’s Cooking – News, Triggers, Drama
🧾 ₹3,000 Cr NCD raise approved in April 2025 for growth capital
🎯 Credit rating upgraded to AA- by CARE and Fitch in FY25
🏦 Home Finance subsidiary liquidated (focus sharpening)
💰 ₹400 Cr funding secured for women and low-income entrepreneurs
📊 Q4FY25 net profit ₹94 Cr → run-rate EPS: ₹3.5+
6. Balance Sheet – How Much Debt, How Many Dreams?
| FY25 Snapshot | Value |
|---|---|
| Total Assets | ₹8,596 Cr |
| Borrowings | ₹5,264 Cr |
| Net Worth | ₹3,190 Cr |
| D/E Ratio | ~1.65x |
⚠️ Healthy leverage for an NBFC. Well within RBI comfort zones.
7. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | Comment |
|---|---|---|
| FY23 | ₹-1,245 | Loan book growing aggressively |
| FY24 | ₹-1,155 | Still investing in disbursals |
| FY25 | ₹-1,415 | Not FCF positive – but expected in fast-lending NBFCs |
🧠 Cash flow will stay negative until disbursement > repayment growth plateaus. That’s okay (for now).
8. Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 11.6% |
| ROCE | 11.6% |
| GNPA | 2.74% |
| NNPA | 1.51% |
| NIMs (Est.) | 9–10% |
| Cost to Income | ~40% (efficient) |
🔍 NPAs are steady and well-provisioned. Not alarming.
9. P&L Breakdown – Show Me the Money
FY25:
- Revenue: ₹1,305 Cr
- PAT: ₹345 Cr
- EPS: ₹3.18
- OPM: 68.6%
- Net margin: 26.4%
💰 Quarterly profit growing at 8–10% QoQ — like clockwork.
10. Peer Comparison – Who Else in the Game?
| Company | EPS | P/E | ROE | AUM Size | Remarks |
|---|---|---|---|---|---|
| SBFC | ₹3.18 | 34.9x | 12% | ~₹7,500 Cr | MSME focus |
| Bajaj Fin | ₹27.6 | 34.6x | 19% | ₹2.7L Cr+ | All-rounder |
| Shriram Fin | ₹40 | 15.3x | 15% | ₹1.5L Cr+ | Used vehicle king |
| Muthoot | ₹132 | 20x | 19.5% | ₹80K Cr+ | Gold loan boss |
| HDB Fin | ₹17.5 | 32.3x | 14.7% | ₹60K Cr+ | Unlisted behemoth |
🧠 TL;DR: SBFC is a baby Bajaj Finance… but priced like a teenager.
11. Misc – Shareholding, Promoters
- Promoter Holding: Falling – from 64% → 53% in 1 year
- FII stake ↑: 2.7% → 6.5%
- DII stake ↑: 12.4% → 17.7%
- Public: Steady around 22–24%
- Shareholders: 153,000+ (retail has entered)
🚨 Promoter selling not alarming — post-IPO dilution + NCD plans likely.
12. EduInvesting Verdict™
SBFC Finance is executing beautifully in a massive, underserved MSME lending space, with strong underwriting, expanding margins, and clockwork growth.
But it’s also no longer cheap — 35x P/E for 12% ROE is future optimism premium.
🏁 Great execution, solid potential.
🚨 But if growth slows or NPAs rise, the high multiple could sting.
🔍 Fair Value Range (FY26E EPS ₹4.2–4.5) = ₹84 – ₹113
CMP at ₹111 means you’re paying full price for perfection. Not a bargain, but not insane either.
✍️ Written by Prashant | 📅 9 July 2025
Tags: SBFC Finance, MSME lending, smallcap NBFC, gold loan NBFCs, secured loans, Bajaj Finance vs SBFC, fintech lending, high growth NBFCs, IPO stock analysis
