SBFC Finance Limited , a prominent player in the secured lending space, has reported robust financial performance for Q2 FY'26, marking significant growth and reaching a key milestone in its journey.

Strong Financial Performance

SBFC Finance has delivered impressive results for the quarter ended September 2025:

The company crossed the Rs 10,000 crore AUM milestone during the quarter, showcasing its strong growth trajectory.

Improved Operational Efficiency

SBFC Finance has demonstrated enhanced operational efficiency:

• Yield improved to 18.01%, up 2 basis points QOQ and 32 basis points YOY
• Cost of borrowing reduced to 8.96%, down 36 basis points both QOQ and YOY
• Spread widened to 9.05%, improving 38 basis points QOQ and 68 basis points YOY
• Operating expenses continued to improve due to enhanced operating leverage

Asset Quality and Credit Strategy

The company maintains a cautious outlook on asset quality:

• Gross NPA remained range-bound at 2.77%
• Provision coverage ratio stood at 46.17%
• Credit cost increased to 1.29% for the quarter
• The company has tightened its credit filters, stopping lending below Rs 7 lakhs and raising the minimum CIBIL score requirement to 700

Business Focus and Expansion

SBFC Finance continues to focus on secured lending:

• MSME AUM, constituting 82% of total AUM, grew by 29% YOY and 6% QOQ
• The company operates through 220 branches, adding 5 branches during the quarter
• 100% of the loan book is secured by properties and gold

Management Commentary and Outlook

Aseem Dhru, MD & CEO, commented on the results, stating, "We have crossed 14% ROE, and as more things go our way, in terms of what has been said as operating leverage, hopefully, it will have the effect on ROE."

The management has guided for:

• 5-7% quarter-on-quarter AUM growth
• Potential increase in credit costs by 10-15 basis points before stabilization
• Continued focus on tightening credit screens and managing asset quality

Conclusion

SBFC Finance's Q2 FY'26 results demonstrate the company's resilience and growth potential in the secured lending space. While navigating challenges in certain geographies and loan segments, the company's strategic focus on operational efficiency and prudent credit practices positions it well for sustainable growth in the coming quarters.

SBFC Finance Limited , a non-banking financial company (NBFC), has announced its unaudited financial results for the quarter and half-year ended September 30, 2025. The company's board of directors approved these results during a meeting held on November 1, 2025.

Key Highlights

• SBFC Finance reported a net profit of Rs 1.09 billion for the quarter, compared to Rs 840 million in the same period last year, marking a 30% increase.
• The company's interest income increased to Rs 3.8 billion from Rs 2.8 billion year-on-year.
• The company issued 3,76,240 equity shares during the quarter and 71,98,313 shares during the half-year to employees under stock option policies.
• An additional 1,05,000 equity shares were transferred from the employee welfare trust to eligible employees during the half-year.
• SBFC Finance raised Rs 200 crore through Non-Convertible Debentures (NCDs) in August 2025.

Financial Performance

For the quarter ended September 30, 2025, SBFC Finance reported the following results:

Asset Quality

As of September 30, 2025:

• Gross Non-Performing Asset (GNPA) ratio stood at 2.77%, slightly lower than the 2.78% reported in the previous quarter.
• Net Non-Performing Asset (NNPA) ratio was 1.51%, down from 1.57% in the previous quarter.
• The provision coverage ratio improved to 46.17% from 44.38% in the previous quarter.

The marginal improvement in asset quality metrics indicates better asset quality management by the company.

Capital Adequacy and Liquidity

• The company maintained a strong capital position with a Capital to Risk Assets Ratio (CRAR) of 34.05%.
• The Liquidity Coverage Ratio stood at 174.00%, indicating robust liquidity management.

NCD Issuance and Utilization

SBFC Finance raised Rs 200 crore through Non-Convertible Debentures in August 2025. As of September 30, 2025, Rs 101.90 crore of this amount has been utilized for onlending to secured micro, small and medium enterprises and gold loans. The company confirmed that it maintains sufficient security cover for its listed non-convertible debentures and is in compliance with regulatory requirements.

Employee Stock Options

The company continues to use employee stock options as a tool for talent retention and alignment of employee interests with those of the company. During the quarter, 3,76,240 equity shares were issued to employees under various SBFC Stock option policies.

Outlook

SBFC Finance has shown strong growth in revenue and profitability while maintaining a cautious approach to asset quality. The slight improvement in GNPA and NNPA ratios, along with an increased provision coverage ratio, suggests a focus on maintaining asset quality while pursuing growth.

The company's robust capital adequacy and liquidity position indicate its preparedness to capitalize on growth opportunities in the NBFC sector, particularly in lending to micro, small, and medium enterprises.

SBFC Finance's continued use of employee stock options and the recent NCD issuance demonstrate its focus on employee retention and diversifying its funding sources, which could support its growth plans in the coming quarters.