SBFC Finance Limited conducted its Q1 FY27 earnings conference call on 25th July 2026, with the transcript filed pursuant to Regulation 30 of SEBI Listing Regulations. The management team included Executive Vice Chairman Aseem Dhru, MD & CEO Mahesh Dayani, CFO Sanket Agrawal, and CRO Rajiv Thakker.

Financial Performance

  • Total AUM reached ₹11,922 crores, showing 27% YoY growth and 6% QoQ growth
  • MSME AUM stood at ₹9,271 crores (4.5% QoQ growth)
  • Gold loan AUM reached ₹2,631 crores (11% QoQ growth)
  • PAT increased to ₹130 crores, up 29% YoY and 6% QoQ
  • ROE stood at 14.73% for the quarter
  • Return on average AUM was 4.53%

Operational Metrics

  • MSME disbursements were ₹809 crores, up 3% QoQ
  • Branch network expanded to 256 branches (5 new branches added in Q1)
  • Yields were 17.9% (down 9 bps YoY, up 29 bps QoQ)
  • Cost of borrowing reduced to 8.42% (down 90 bps YoY, 10 bps QoQ)
  • Spreads improved to 9.48% (up 81 bps YoY, 39 bps QoQ)
  • NIMs stood at 10.6%
  • Operating expense ratio was 4.29% (up 36 bps QoQ)

Asset Quality

  • GNPA at 2.66% (improved 12 bps YoY, increased 5 bps QoQ)
  • PCR at 42%
  • Credit cost for the quarter at 1.45%
  • Stage 2 ECL coverage increased to 16% from 6%
  • Total provisioning to assets at 1.91% (approximately 2x regulatory requirement)
  • 0+ DPD increased by 70 bps during the quarter

Capital and Liquidity

  • Capital adequacy ratio at 32%
  • Tangible net worth at ₹3,613 crores as of June 2026
  • Liquidity position of ₹1,864 crores maintained
  • Company plans to maintain higher liquidity as it grows toward ₹15,000 crores AUM

Business Environment and Challenges

Management highlighted multiple headwinds during the quarter:

  • Volatile interest rates in March 2026
  • Declining gold prices affecting loan amounts
  • New regulations effective April 1, 2026, resetting eligibility norms
  • Regulatory circular mandating banks not to accept collateral security for MSME customers within ₹20 lakh ticket size, affecting co-origination (reduced from 20% to 10% of disbursals)
  • Competitive pricing pressures from competitors
  • Inflation affecting disposable income and repayment capacity
  • Login to disbursal conversion moderated to 34% from 42%

Guidance and Outlook

  • Cost reduction guidance of 25 bps reduction for the year remains unchanged
  • Credit cost expected to remain range-bound at 1.4-1.5% in the short term
  • Co-origination mix expected to return to usual run rate from current quarter
  • Branch expansion planned at 10-15 branches for the full year
  • Yields expected to stabilize in the range of 17.50% to 17.75%
  • Company remains focused on maintaining spreads above 9%

Strategic Focus

Management emphasized their anti-fragile approach and cautious optimism. The company is working toward its growth target from ₹10,000 crores to ₹20,000 crores AUM while maintaining discipline in capital allocation and risk management. The focus remains on consistent profitable growth with attention to spreads, NIMs, ROA, and ROE.

Q&A Highlights

Analysts questioned the company about:

  • Over-leveraged position in sub-₹10 lakh ticket size segment
  • Product expansion plans (management confirmed focus on existing products)
  • Employee cost increases (attributed to increments and new branch openings)
  • Yield improvements (driven by gold portfolio performance)
  • 1+ DPD uptick (seasonal pattern expected to stabilize)
  • Incremental yields (expected to remain in similar range)
  • Disbursement trends (co-origination reset completed, expected improvement)

The conference call was hosted by ICICI Securities Limited and included participation from various analysts including Renish Bhuva, Meghna Luthra (InCred), Madan Shah (Madan Investments), and Nischint (Kotak).