SBFC - SBFC Finance

📊 NSE: SBFC 🏢 Finance & Investments 📅 Last Updated: 12/14/2025 12:56

💰 Financial Performance

Revenue Growth by Segment

Total Income grew 28% YoY to INR 1,306.1 Cr in FY25. Interest Income on Loans grew 35% to INR 1,167.4 Cr, while Fee & Other Income grew 8% to INR 109.8 Cr. Interest Income other than on Loans declined 45% to INR 28.9 Cr.

Geographic Revenue Split

Operations are spread across 205 branches in 16 states and 2 Union Territories, focusing on underbanked Tier II and Tier III cities.

Profitability Margins

Net Profit Margin was 26.4% (INR 345.2 Cr PAT on INR 1,306.1 Cr income). Return on Average AUM improved to 4.53% (up 39 bps) and Return on Average Tangible Equity reached 12.72% (up 144 bps).

EBITDA Margin

Pre-Provisioning Operating Profit (PPOP) margin was 40.7% (INR 532.2 Cr on INR 1,306.1 Cr income), improving from 35.6% in FY24 due to a 47% YoY growth in PPOP.

Capital Expenditure

Raised INR 750 Cr through IPO and pre-IPO funding to strengthen Tangible Net Worth to INR 2,930 Cr. Primary capital usage is for AUM growth and branch network expansion (205 branches).

Credit Rating & Borrowing

Reaffirmed [ICRA]AA- (Stable) and CARE AA- (Stable) for long-term facilities; CARE A1+ assigned for Commercial Paper. Finance costs increased 20% YoY to INR 419.2 Cr.

⚙️ Operational Drivers

Raw Materials

Debt Capital (Bank Term Loans, Non-Convertible Debentures, Commercial Paper) represents the primary cost of capital.

Import Sources

Domestic financial markets and the Indian banking system.

Key Suppliers

Public Sector Undertaking (PSU) Banks, Private Banks, and Financial Institutions (88% of funding profile).

Capacity Expansion

Current network of 205 branches across 16 states and 2 UTs. Expansion is focused on Tier II and Tier III cities to target the INR 4 Trillion MSME lending market.

Raw Material Costs

Finance costs (cost of capital) stood at INR 419.2 Cr, representing 32.1% of total income, a 20% increase YoY as the company scaled its AUM to INR 9,351 Cr.

Manufacturing Efficiency

Operating efficiency improved as OpEx to Average AUM ratio decreased by 69 bps to 4.65% in FY25.

Logistics & Distribution

Operating expenses of INR 354.6 Cr (27.1% of income) cover the distribution network of 205 branches.

📈 Strategic Growth

Expected Growth Rate

25-30%

Growth Strategy

Targeting the INR 4 Trillion MSME segment (loans between INR 0.5M-3M) which is growing at a 24% CAGR. Strategy involves deeper penetration into Tier II/III cities and leveraging a technology-led underwriting model.

Products & Services

Loan Against Property (LAP), Gold Loans, and Insurance products (Composite Corporate Agent).

Brand Portfolio

SBFC

New Products/Services

Obtained a Corporate Agent (Composite) License from the Insurance Regulatory authority to cross-sell insurance products.

Market Expansion

Deeper penetration into Tier II and Tier III cities across 16 states to capture the 24% CAGR growth in the MSME segment.

Strategic Alliances

Backed by the Clermont Group; acquired legacy portfolio from Karvy Financial Services Limited.

🌍 External Factors

Industry Trends

The MSME lending market for loans between INR 0.5M-3M is valued at INR 4 Trillion and is growing at a 24% CAGR. The industry is shifting toward digital-first lending and is governed by the RBI's scale-based regulatory framework.

Competitive Landscape

Competes with banks and other NBFCs in the INR 4 Trillion MSME lending space.

Competitive Moat

The company maintains a durable advantage through its focus on a granular, secured loan book (LAP and Gold) which limits Loss Given Default. This is supported by a management team with 28+ years of experience (ex-HDFC Bank) and a technology-led underwriting model.

Macro Economic Sensitivity

Sensitive to India's GDP growth (6.5% in 2025) and MSME sector health; MSME loan book doubling every three years (24% CAGR).

Consumer Behavior

Shift toward digital credit access and formalization of MSME lending.

Geopolitical Risks

Low direct impact; primarily domestic lending focus.

⚖️ Regulatory & Governance

Industry Regulations

RBI Scale-Based Regulatory framework and Insurance Regulatory (for corporate agency license).

Environmental Compliance

Promotes digital lending and paperless operations to reduce environmental footprint; reported zero instances of data breaches or regulatory penalties in FY25.