NewsSBFC Finance Q4 FY26 Earnings Call: AUM Crosses ₹11,270 Crores, PAT Grows 31% for Full YearSBFC Finance Q4 FY26 Earnings Call: AUM Crosses ₹11,270 Crores, PAT Grows 31% for Full Year
SBFC Finance reported Q4 FY26 PAT of ₹123 crores, up 30% YoY, and full-year PAT of ₹451 crores, up 31% YoY, as total AUM reached ₹11,270 crores with 29% annual growth. Cost of borrowing declined 83 basis points YoY to 8.52%, while spreads expanded 56 basis points YoY to 9.09%, and GNPA improved to 2.61%. The company expanded its branch network to 251 branches and maintained a CRAR of 32.8%, with management reiterating quarterly growth guidance of 5% to 7% and targeting opex reduction of 20 to 25 basis points through FY27.
*this image is generated using AI for illustrative purposes only.
SBFC Finance held its Q4 FY26 Earnings Conference Call on April 27, 2026, with the senior management team—including Executive Vice-Chairman Aseem Dhru, MD & CEO Mahesh Dayani, CFO Narayan Barasia, Chief Strategy Officer Sanket Agrawal, and Chief Risk Officer Rajiv Thakker—presenting the company's financial results and strategic outlook. The call was moderated by Renish Bhuva of ICICI Securities.
Financial Performance: Strong Growth Across Key Metrics
SBFC Finance delivered a robust set of numbers for Q4 FY26, with broad-based growth across AUM, profitability, and asset quality. The following table summarises the key financial metrics for the quarter and full year:
| Metric: | Q4 FY26 | YoY Change | QoQ Change |
|---|---|---|---|
| Total AUM: | ₹11,270 crores | +29% | +8% |
| MSME AUM: | ₹8,873 crores | +22% | +4% |
| Gold Loan AUM: | ₹2,374 crores | +63% | +22% |
| PAT (Quarter): | ₹123 crores | +30% | +4% |
| PAT (Full Year): | ₹451 crores | +31% | — |
| Yield: | 17.61% | — | — |
| Cost of Borrowing: | 8.52% | -83 bps YoY | — |
| Spread: | 9.09% | +56 bps YoY | +5 bps QoQ |
| Opex: | 3.93% | -69 bps YoY | ~Flat QoQ |
| GNPA: | 2.61% | -13 bps YoY | -10 bps QoQ |
| PCR: | 41.64% | — | — |
| Credit Cost: | 1.38% | — | — |
| CRAR: | 32.8% | — | — |
| Return on Avg. AUM: | 4.57% | — | — |
| Return on Avg. Tangible Equity: | 14.48% | — | — |
| Tangible Net Worth: | ₹3,465 crores | — | — |
MSME disbursements for the quarter stood at ₹785 crores. The company added 21 branches during the quarter, bringing the total branch count to 251 as of March 2026. The book remains 100% secured, either by property or gold.
Cost Efficiency and Capital Position
Management highlighted significant improvements in cost metrics over the year. Compared to end of FY25, cost of funds declined by 48 basis points, cost of operations fell by 46 basis points, and cost of credit increased by 30 basis points. Cumulatively over three years since listing, the company delivered a 161-basis-point reduction in opex against a guided target of 150 basis points. The company's ECL provisioning stands at 1.84%, which is 2.1x the IRAC norms used by banks. With a CRAR of 32.8% and a debt-to-equity leverage of 1.9, management indicated that the company has sufficient capital to grow AUM to approximately ₹18,000 crores to ₹19,000 crores before needing to access markets, which they estimate is at least two years away.
Strategic Outlook and Growth Guidance
Management reiterated its quarterly AUM growth guidance of 5% to 7%, noting that the company grew above 7.5% in Q4 FY26 and 29% on a full-year basis. The total addressable market was estimated at approximately INR 4 lakh crores. Key strategic priorities include:
- Branch expansion: Stabilising at 275 branches during FY27 to consolidate recent investments before further scaling
- Portfolio mix: Maintaining MSME and gold loan mix at approximately 75% and 25% respectively, with gold potentially moving closer to 25% given new branch additions
- Co-origination: Expected to remain at 18% to 19% of AUM through FY27
- Opex reduction: Targeting a further 20 to 25 basis points decline through the year
- Average ticket size: Continuing to remain below INR 2.5 lakhs
- Loan-to-value on gold: Conservatively maintained below 60%, closer to 56% to 57%
Management noted that pre-provision operating profit (PPOP) grew by approximately 37% in FY26, driven by efficiency gains in finance cost and opex, even as AUM grew at 28% to 29%.
Asset Quality and Risk Management
GNPA improved to 2.61%, down 10 basis points QoQ and 13 basis points YoY. Management guided credit costs to remain range-bound at approximately 1.38%, with potential marginal benefits of 5 basis points. Stage 2 provisions were strengthened during the year, with stage 2 moving from approximately 6% to 16%. An annual refresh of the PD/LGD model resulted in inter-stage adjustments—over-provisioning in stages 1 and 3 was corrected against under-provisioning in stage 2—with no net impact on overall provisions. On risk management, the company highlighted the rollout of a multilingual app for standardising credit manager personal discussions, branch-level risk rating introduced over the last 6 to 7 months, and tightened fraud risk filters across distributed branches.
Distribution Strategy and Market Penetration
Management emphasised that SBFC Finance is present in only approximately 30% of districts within its operating states, and within those districts, penetration remains limited. The company operates across 15 states and follows a direct sourcing model, with no immediate plans to engage DSAs or connectors. Approximately three-fourths of customers borrow against their property for the first time. The hub-and-spoke cluster model—with a senior supervisor managing 5 to 6 branches within a 30-kilometre radius—guides branch expansion decisions, supported by quarterly bureau score refreshes at the pin code level. Management indicated that approximately 60% of branches are more than 3 years old, with an average AUM of ₹66 crores and above, reflecting the maturity of the distribution network. Gold loan branches account for close to 220 out of 251 total branches.
Historical Stock Returns for SBFC Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.86% | +2.94% | +15.47% | -13.91% | +0.75% | +4.95% |
How might rising competition from fintech lenders and large banks expanding into the MSME secured lending space impact SBFC Finance's ability to maintain its 17.6% yield levels over the next 12-18 months?
Given that SBFC Finance estimates it can grow AUM to ₹18,000-19,000 crores before needing fresh capital, what equity dilution or fundraising strategy is management likely to pursue when that threshold approaches in FY28-29?
With gold loan AUM growing at 63% YoY and the portfolio mix potentially shifting toward 25%, how exposed is SBFC Finance to regulatory tightening on gold loan LTV norms or RBI scrutiny of gold lending practices?
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