SBFC Finance posts 27% profit growth, with revenue slightly beating estimates
Key Facts
SBFC Finance reported profit after tax of 139 crore rupees in the second quarter of fiscal 2026-2027, which ended in September 2026, up 27% year on year and 7% from the previous quarter, according to Investing.com. The platform described the company’s revenue as narrowly beating analysts’ estimates. It did not provide revenue or estimate figures, while the results cover an Indian fiscal quarter rather than the second quarter of calendar 2026. Profit growth came alongside asset expansion and improvements in operating metrics and credit quality. The article published on October 26 covered the quarterly results, while the company had announced that its results call would be held the same day at 09:30 India time. The available figures therefore focus on the period’s results and the performance indicators reported by Investing.com.
Assets under management reached 12,592 crore rupees in September, up 27% from a year earlier and 6% from the previous quarter, according to Investing.com. The growth reflects an expansion of the lending portfolio, which is divided between small and medium enterprise loans and gold loans. Small and medium enterprise loans accounted for 77% of assets, compared with 23% for gold loans. The chief financial officer said the entire portfolio, or 100%, was secured. Chief Executive Mahesh Dayani said the company had achieved 36 consecutive quarters of growth, adding: "We intend to protect this trajectory with the same discipline with which we built it." These indicators place business growth in the context of continued expansion across more than one quarterly cycle.
Disbursements of small and medium enterprise loans rose to 855 crore rupees in the quarter, up 6% from the previous quarter, according to the chief financial officer as quoted by Investing.com. He said disbursements moved from 699 crore rupees in December 2025 to 785 crore rupees in the following quarter, then to 809 crore rupees in the first quarter of fiscal 2026-2027, before reaching the latest level. The sequential path represents an increase in lending across the quarters cited. Management expects double-digit year-on-year growth in these loan disbursements in the second half of fiscal 2027, compared with the same period a year earlier. The outlook follows a repositioning of the portfolio, according to the article. The company also said it has room to increase assets under management to about 20,000 crore rupees before it needs to raise additional capital.
Net interest margin was 9.63%, above the company’s guidance range of 9% to 9.25%, according to Investing.com. Net lending yield reached 18.0%, up 10 basis points quarter on quarter. Meanwhile, the cost of funds fell to 8.41%, down 55 basis points from a year earlier and one basis point from the previous quarter. The company raised its benchmark lending rate by 25 basis points in October 2026, and management said it expects floating-rate assets to be repriced over time. This places lending and funding rate movements among the factors that will affect margins in coming periods. The article did not quantify the expected impact of repricing.
Some operating and credit indicators improved during the quarter. The operating expense ratio fell to 4.07%, down 22 basis points from the previous quarter, and management said it aims to reduce it by 25 basis points in fiscal 2027. For the first half, the ratio was lower by 30 basis points year on year, according to the quotation reported by Investing.com. The credit cost ratio fell to 1.37% from 1.44% in the first quarter of fiscal 2026-2027. Gross non-performing assets stood at 2.64%, 13 basis points below the level a year earlier. Return on equity was 15.04%, while return on average assets was 4.58%.
On funding and solvency, the capital adequacy ratio was 31%, and the debt-to-equity ratio was 2.31 times, according to Investing.com. Management is maintaining its target for assets under management growth of between 5% and 7% each quarter, the platform reported. But management expressed caution about gold loans because of intensifying competition and the possibility of pressure on yields. The chief financial officer said the product’s yield typically ranges from 18% to 21% and is variable, adding: "On yields, we generally operate in the 18%-21% range; it is a product with variable yields." Management said it does not want to pursue volume growth at the expense of pricing. This approach makes the preservation of lending terms and returns a consideration as the business expands.
Ahead of the results announcement, the stock ended Friday, October 23, at 79.82 Indian rupees, slightly below Thursday’s close, according to Informist Media. The close provides price context ahead of the announcement and does not indicate the stock’s movement after the results were released. The company’s performance remains tied to the pace of asset growth and small and medium enterprise loan disbursements, as well as trends in funding and credit costs. Management will also be tested on its ability to preserve returns in gold lending as competition increases. The company raised its benchmark lending rate in October and expects floating-rate assets to be repriced over time. The target to reduce the operating expense ratio by 25 basis points applies to fiscal 2027.