SBFC Finance (SBFC) Q1 25/26 earnings summary

Executive summary

• Achieved profit after tax of ₹101 crore for the quarter, marking a 28% year-over-year increase and a significant milestone in quarterly profitability.

• AUM reached ₹9,351 crore, up 30% year-over-year, with a branch network expanded to 215 across 16 states and 2 UTs.

• Focus remains on secured MSME loans (₹5–30 lakh ticket size), leveraging a pan-India network and avoiding metros due to urban consumption slowdown.

• Experienced management, strong corporate governance, and backing by marquee investors.

• Unaudited financial results for the quarter ended June 30, 2025, were approved, confirming continued growth and compliance.

Financial highlights

• Total income for Q1 FY26 was ₹3,885.42 million, up 30.6% YoY; net profit stood at ₹1,008.92 million, with basic EPS at ₹0.93.

• Yield for the quarter was 17.99% with a spread of 8.67%; cost of borrowing at 9.32%.

• Operating expense ratio improved to 4.59%, down 21-25 basis points YoY.

• Gross NPA at 2.78% and Net NPA at 1.57%; provision coverage ratio at 44.38%.

• Capital adequacy at 34.3% and tangible net worth at ₹3,039 crore.

Outlook and guidance

• Targeting 5%-7% quarter-on-quarter AUM growth and a 50 basis point reduction in cost of operations for the year.

• Expecting credit cost to rise by 15-20 basis points, with full-year credit cost guidance at 1.25%-1.3%.

• ROE currently at 13.5%, aiming for 15% over time; ROA expected to compress slightly as leverage increases.

• Continued focus on granular, secured lending and technology-driven underwriting.

• No deviation in the use of NCD proceeds; all funds utilized as intended for on-lending to secured MSMEs.