SBFC Finance Limited has successfully raised ₹200 crore through the allotment of redeemable, senior, secured, listed, non-convertible debentures (NCDs) via private placement. This strategic move strengthens the company's financial position and demonstrates investor confidence in its growth prospects.

Key Details of the NCD Issuance

Significance of the Issuance

The NCDs are classified as senior secured instruments, which indicates that they hold priority in repayment and are backed by collateral. This structure offers additional security to investors and potentially allows SBFC Finance to secure funding at more favorable terms.

Approval Process

The NCD issuance underwent a thorough approval process:

1. Shareholders approved the issuance at the Annual General Meeting on July 14, 2025.
2. BSE Limited granted in-principle listing approval on June 9, 2025.
3. The Board of Directors approved the allotment through a resolution passed by circulation on August 20, 2025.

Security and Repayment

The NCDs are secured by a first-ranking, pari-passu charge over the hypothecated assets of SBFC Finance. This arrangement provides an additional layer of protection for investors.

Interest Payment Schedule

Interest payments on the NCDs will be made monthly, with the first payment scheduled for September 22, 2025. The final interest payment, along with the principal amount, will be due on the maturity date of August 20, 2027.

Market Implications

This successful NCD issuance by SBFC Finance highlights the company's ability to access debt markets and diversify its funding sources. It also reflects positively on the company's creditworthiness and financial management strategies.

The raised funds are likely to support SBFC Finance's growth initiatives and strengthen its lending capabilities in the competitive financial services sector. As the company continues to expand its operations, this infusion of capital could play a crucial role in its strategic plans and market positioning.

SBFC Finance Limited , a prominent player in the MSME and gold loan segments, has reported a robust financial performance for Q1, despite facing headwinds in the small-ticket MSME loan category.

Financial Highlights

The company posted a profit after tax of INR 101.00 crores for the quarter, marking a significant 28% year-on-year growth and a 7% quarter-on-quarter increase. This milestone achievement reflects SBFC Finance's resilience in a challenging economic environment.

SBFC Finance's Assets Under Management (AUM) reached INR 9,351.00 crores, showcasing a strong 30% year-on-year growth. The company's yield improved by 11 basis points to 17.99%, while borrowing costs decreased by 3 basis points to 9.32%, resulting in a healthy spread of 8.67%.

Operational Performance

The company continued its expansion strategy, adding 10 new branches during the quarter, bringing the total branch count to 215. This expansion has contributed to SBFC Finance's growing presence across India.

SBFC Finance maintained a strong capital adequacy ratio of 34.30%, with a return on equity (ROE) of 13.53%.

Challenges in MSME Segment

Despite the overall positive performance, SBFC Finance is experiencing stress in smaller ticket size MSME loans. The company reported an increase in 1+ Days Past Due (DPD) levels and a drop in collection efficiency. Management cited political risks, particularly in Karnataka, and overleveraged individual balance sheets as key challenges.

In response to these challenges, SBFC Finance has tightened its underwriting standards, increasing rejection rates by 10%. The company expects credit costs to rise by 15-20 basis points from the current 1.11% level.

Asset Quality

The Gross Non-Performing Assets (GNPA) remained range-bound at 2.78% with a Provision Coverage Ratio (PCR) of 44.40%.

Future Outlook

SBFC Finance maintains its guidance for 5-7% quarter-on-quarter AUM growth. The management aims for a 50 basis point reduction in operational costs for the year.

In conclusion, while SBFC Finance has delivered strong financial results, it remains cautious about the evolving economic landscape, particularly in the MSME sector. The company's proactive approach to risk management and strategic diversification is likely to play a crucial role in navigating the challenges ahead.