SBFC Finance Limited reported a 29% year-on-year increase in net profit to ₹130 crore for the quarter ended June 30, 2026 (Q1FY27), driven by a 27% surge in assets under management (AUM) to ₹11,922 crore and improved operational efficiency. The NBFC’s profit after tax (PAT) grew from ₹101 crore in Q1FY26, supported by a widening spread of 9.48% and a reduction in the cost-to-AUM ratio by 30 basis points to 4.29%. This performance highlights the company’s ability to scale profitability while maintaining asset quality in the secured MSME lending segment.

The Board of Directors approved the unaudited financial results on July 25, 2026, based on recommendations from the Audit Committee. The results were reviewed by statutory auditors M M Nissim & Co. LLP under Regulation 33, 52, and 54 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. SBFC Finance also submitted an investor presentation detailing its business momentum, credit underwriting framework, and liquidity position.

Financial Performance

Total income rose 26.5% YoY to ₹492 crore, with interest income on loans contributing ₹454 crore, up from ₹350 crore in the previous year’s quarter. Pre-provisioning operating profit (PPOP) expanded 34.4% to ₹216 crore. Despite a rise in credit costs to ₹42 crore from ₹25 crore, the company maintained strong margins. Return on average tangible equity (RoATE) improved by 120 basis points to 14.73%, while return on average AUM (RoAAUM) remained stable at 4.53%.

Operating expenses increased to ₹123 crore from ₹103 crore, but the cost-to-AUM ratio declined to 4.29% from 4.59%. The borrowing cost decreased by 90 basis points to 8.42%, aiding the expansion in net interest margin to 10.68%.

Asset Quality and Capital Position

Gross non-performing assets (GNPA) stood at 2.66%, down 12 basis points YoY but up 5 basis points QoQ. Net non-performing assets (NNPA) were 1.55%, consistent with recent trends. The provision coverage ratio (PCR) was 42.22%, slightly higher than 41.64% at the end of FY26. The capital adequacy ratio (CRAR) was 31.95%, down from 32.84% at the end of FY26, reflecting asset growth against the capital base. Tangible net worth rose to ₹3,613 crore.

AUM grew 27% YoY to ₹11,922 crore, with secured MSME loans constituting 78% of the portfolio. Disbursement value for secured MSME loans remained flat at ₹809 crore, while volume declined 11% to 7,700 tickets, indicating a shift towards larger ticket sizes. Over 89% of the AUM comprised customers with CIBIL scores above 700, underscoring credit quality.

What the Numbers Show

The divergence between PPOP growth (34.4%) and revenue growth (26.5%) indicates significant operational leverage, as the cost-to-AUM ratio improved despite rising absolute expenses. The widening spread of 81 basis points YoY, driven by a stable yield of 17.90% and lower borrowing costs, directly fueled the expansion in RoATE. While credit costs rose sharply, they remain manageable relative to the growing loan book, suggesting that the provision coverage is adequate for current asset quality trends.

SBFC Finance Limited will hold an earnings conference call on July 25, 2026, to discuss its financial performance for the quarter ended June 30, 2026. The call provides investors and analysts an opportunity to review the company's Q1FY27 results directly with its leadership team. The session is scheduled to begin at 05:00 PM IST.

The discussion will be led by the company's top management, including Mr. Aseem Dhru, Executive Vice Chairman; Mr. Mahesh Dayani, MD & CEO; Mr. Sanket Agrawal, Chief Financial Officer; and Mr. Rajiv Thakker, Chief Risk Officer. Their participation allows stakeholders to seek clarity on the financial figures and operational highlights for the reported period.

Conference Call Access Details

Participants can join the call using the universal access numbers provided. International investors have access to specific toll-free lines to facilitate attendance from various global locations.

The event is coordinated by ICICI Securities. For further information regarding the results or the conference call, investors may contact Mr. Sanket Agrawal, Chief Financial Officer, at sanket.agrawal@sbfc.com . The intimation regarding this schedule has been uploaded to the company's official investor relations website.