SBFC Finance (SBFC) Q1 25/26 earnings summary

Executive summary

• Achieved profit after tax of ₹101 crore for the quarter, up 28% year-over-year, with AUM reaching ₹9,351 crore, marking a significant milestone in quarterly profitability and growth.

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

• Branch network expanded to 215 across 16 states and 2 UTs, focusing on secured MSME loans and leveraging a pan-India presence.

• Focus remains on small businesses in semi-urban and rural areas, with urban consumption showing weakness.

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

Financial highlights

• Total income for Q1 FY26 was ₹3,885.42 million, up from ₹2,975.07 million in Q1 FY25; net profit stood at ₹1,008.92 million, with basic EPS at ₹0.93.

• PAT for the quarter at ₹101 crore, up 28% YoY and 7% QoQ; yield at 17.99%, spread at 8.67%.

• Cost of borrowing reduced to 9.32%, OpEx at 4.59%, and cost-to-income ratio at 39%.

• GNPA at 2.78%, Net NPA at 1.57%, PCR at 44.38%, and credit cost at 1.11% for the quarter.

• Capital adequacy ratio at 34.3%, tangible net worth at ₹3,039 crore, and liquidity coverage ratio at 171.81%.

Outlook and guidance

• Targeting 5%-7% quarter-on-quarter AUM growth as business-as-usual, with ROE target at 15% over time.

• Cost of operations expected to reduce by 50 bps over the year; credit cost guidance increased by 15-20 bps.

• ROA expected to compress slightly as leverage increases, but ROE to improve.

• Market opportunity in MSME financing (₹5–30 lakh) estimated at ₹41 lakh crore, growing at 24% CAGR.

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