SBFC Finance Reports 30% YOY Profit Growth, Crosses Rs 10,000 Crore AUM Milestone
SBFC Finance Limited reported robust Q2 FY'26 results with a 30% YoY increase in Profit After Tax to Rs 109.00 crore. Assets Under Management grew 29% YoY to Rs 9,938.00 crore, crossing the Rs 10,000 crore milestone. Return on Average Tangible Equity improved to 14.09%. The company showed enhanced operational efficiency with improved yield, reduced borrowing costs, and widened spread. SBFC maintains a cautious outlook on asset quality, with Gross NPA at 2.77% and increased credit cost. The company continues to focus on secured lending, with MSME AUM growing 29% YoY. Management guided for 5-7% quarter-on-quarter AUM growth and potential increase in credit costs.
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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:
| Metric | Q2 FY'26 | YOY Growth | QOQ Growth |
|---|---|---|---|
| Profit After Tax | Rs 109.00 crore | 30% | 8% |
| Assets Under Management | Rs 9,938.00 crore | 29% | 6% |
| Return on Average Tangible Equity | 14.09% | - | Up from 13.53% in Q1 |
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.
Historical Stock Returns for SBFC Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.21% | -0.60% | -9.87% | -6.81% | +20.79% | +14.88% |
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