SG Finserve Limited

Financial Performance Highlights

  • Achieved highest ever quarterly PBT of ₹72 crores, representing 27% quarter-on-quarter growth
  • Loan book reached record ₹4,552 crores, growing 16% quarter-on-quarter and 82% year-on-year
  • Net worth stands at ₹1,539 crores with leverage of 2.2x and capital adequacy ratio of 32%
  • Annualized return on asset: 5.1%
  • Annualized return on equity: 14%
  • Maintained nil NPAs with best-in-class asset quality
  • Per employee profitability: more than ₹2 crores per annum

Strategic Business Updates

  • Commercialized Factoring and TReDS solutions during March and April 2026
  • Currently among approximately 1% of financial institutions in India offering Factoring and TReDS
  • Following deepening and widening strategy to grow business through new customer acquisition and increased business with existing customers
  • Continuing to launch new products and structures to augment growth

Financial Guidance

  • Clear visibility to achieve PBT of approximately ₹300 crores for FY27
  • FY27 PBT guidance represents approximately 75% year-on-year growth
  • Targeting 25-30% CAGR growth on AUM over next 3-4 years
  • Targeting 30-35% CAGR growth on profitability over next 3-4 years
  • Planning to transition from 2x leverage to 3x leverage to expand return on equity from current 14% to 16%

Capital Structure and Equity

  • Equity base was ₹1,460 crores as of March 2026
  • Raised ₹20 crores through warrant conversion in April 2026
  • Expected to exit FY27 with equity base of approximately ₹1,700 crores (including expected PAT of ~₹225 crores)
  • No equity raise planned for FY27 as not required
  • Can organically grow to ₹10,000 crores AUM with 3x leverage without needing equity

Business Segment Breakdown

  • Approximately one-third of AUM from APL Apollo ecosystem
  • One-third from non-APL Apollo working capital
  • One-third from beyond supply chain business
  • Factoring business constitutes approximately 5% of total AUM (₹225 crores outstanding in June 2026, up from ₹175 crores in March 2026)

Anchor Client Details

  • 52 anchor mandates with Memorandum of Understandings worth ₹7,700 crores signed
  • Management clarified these are dummy limits that don't necessarily translate to actual book/AUM
  • Acquired five new mandates in Q1 FY27

ESOP Policy Update

  • Total ESOP pool of 20 lakh options approved by shareholders
  • 10,32,000 options granted in April 2026
  • 50,000 new ESOPs granted to new joiners in current board meeting
  • Approximately 9 lakh options remaining in pool for future grants

New Business Initiatives

Insurance Broking:

  • Incorporated wholly owned subsidiary SG Insurance Brokers
  • Applying for IRDAI license
  • Planned as fee-based cross-sell business within existing ecosystem
  • Targeting products like keyman insurance, group health insurance, trade credit insurance
  • Expected launch in Q4 FY27 or later (not expected in Q2 or Q3)

GIFT City Operations:

  • Long-term plan subject to dual regulatory approval from RBI and IFSCA
  • Targeting international supply chain opportunities
  • Provides tax advantages and aligns with government/RBI initiatives

Future Product Expansion:

  • Digital lending business under consideration
  • Loan against property (LAP) business under consideration
  • These represent natural expansion opportunities given existing MSME focus and digital capabilities

Market Opportunity Assessment

  • Factoring target market estimated at ₹25 lakh crores (receivables on balance sheets of top 1,000 corporates)
  • Focus on unaddressed, untapped market rather than existing bank/NBFC financed receivables
  • Supply chain finance market described as very big but niche with only handful of financial institutions catering to it

Risk Factors Discussed

  • Geopolitical uncertainty acknowledged as business risk (reducing incremental working capital requirements)
  • Not currently translating into credit pressure
  • Management maintaining conservative approach with 25-30% growth target despite ability to grow faster
  • Acknowledged that lending business may experience accidents/losses in future despite nil NPA target

Operational Efficiency

  • Maintaining opex cost at 1% of average asset base
  • Lean team structure with strong digital capabilities
  • Operating leverage benefits contributing to profitability

Corporate Vision

  • Long-term vision to be comprehensive financial solution provider beyond NBFC
  • Board approvals obtained for AIF business, ARC business, and GIFT City entity
  • Target to reach ₹10,000 crores AUM by FY30
  • Dependency on APL Apollo ecosystem reduced to one-third of AUM from initial 100%