Any current/future new fundraising through debt or equity?

SBFC Finance Limited is not seeking large levels of finance currently due to being a small company. The funds they are seeking currently appear to be reasonably easily available with good appetite for their paper. They have diversified borrowing away from banks, reducing bank funding from 77% two years ago to 54% last year, with expectations to move under 40% this year. They have raised money through issuance of listed NCDs from mutual funds and plan to further diversify borrowing by borrowing from DIIs and exploring ECBs in the future. There is no specific mention of any imminent fundraising

Any current/future capex/capital investment/strategic investment?

In FY24, SBFC Finance Ltd. made significant IT investments including upgrading their Loan Origination System (LOS), Learning Management System (LMS), data warehouse, disaster recovery/business continuity plan (DR/BCP), and achieving ISO certification. They also enhanced security infrastructure and implemented Sentinel for data protection. For the near future, there are no material further IT investments planned; it will be business as usual with maintenance and health investments continuing. The company has applied for an HFC (Housing Finance Company) license but does not have concrete plans o

Future growth expectations in sales/revenue/volumes?

SBFC Finance Limited aims for a consistent AUM growth of 5% to 7% quarter-on-quarter, as maintained in their guidance. Management expects to open about 20 new branches annually, focusing on deepening presence in existing states rather than expanding to new geographies. Incremental origination ticket sizes are targeted to remain in the range of INR 9-11 lakhs, supporting stable yields and spreads. Co-origination loans are expected to stabilize around 15-20% of overall originations. Growth in gold loans is expected to remain stable at around 15-16% of AUM, with a long-term tilt more towa

Future growth expectations in earnings/operating earnings/profits/EPS?

SBFC Finance aims for consistent AUM growth of 5% to 7% quarter-on-quarter over the next few years. Operating expenses are managed prudently with opex to AUM at 4.8%, expected to reduce in mature branches to under 3%. Credit costs are guided to remain within the 80-100 bps range, maintaining stable asset quality. ROE target is 15% by the last quarter of FY25, driven by operational efficiencies and cost structures "sweating" with scale. Profit before tax growth of around 7.2% sequentially was noted recently, with earnings expected to improve alongside AUM growth. IT and infrastructure investmen

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SBFC Finance LtdQ2 FY24Finance

SBFC Finance Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹91.8P/E: 22.4Market Cap: ₹10.1K CrSector: Finance

Management growth scorecard

Revenue

Category 4

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 4

→SBFC Finance Limited aims for a consistent AUM growth of 5% to 7% quarter-on-quarter, as maintained in their guidance.
→Management expects to open about 20 new branches annually, focusing on deepening presence in existing states rather than expanding to new geographies.
→Incremental origination ticket sizes are targeted to remain in the range of INR 9-11 lakhs, supporting stable yields and spreads.
→Co-origination loans are expected to stabilize around 15-20% of overall originations.
→Growth in gold loans is expected to remain stable at around 15-16% of AUM, with a long-term tilt more towards micro-enterprise loans due to higher ticket sizes.
→Business growth is focused on gradual, compounded expansion without venturing into new product lines, emphasizing steady returns.
→The company expects business normalization post the temporary headwinds of electoral disruptions and regulatory changes affecting disbursements.

Margin guidance

Category 3

→SBFC Finance aims for consistent AUM growth of 5% to 7% quarter-on-quarter over the next few years.
→Operating expenses are managed prudently with opex to AUM at 4.8%, expected to reduce in mature branches to under 3%.
→Credit costs are guided to remain within the 80-100 bps range, maintaining stable asset quality.
→ROE target is 15% by the last quarter of FY25, driven by operational efficiencies and cost structures "sweating" with scale.
→Profit before tax growth of around 7.2% sequentially was noted recently, with earnings expected to improve alongside AUM growth.
→IT and infrastructure investments are largely complete; future incremental expenses to stabilize, supporting margin improvement.
→Dividend payouts are deferred to reinvest profits for growth, suggesting capital efficient expansion to enhance earnings per share over time.

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Fundraise plans

Yes

→SBFC Finance Limited is not seeking large levels of finance currently due to being a small company.
→The funds they are seeking currently appear to be reasonably easily available with good appetite for their paper.
→They have diversified borrowing away from banks, reducing bank funding from 77% two years ago to 54% last year, with expectations to move under 40% this year.
→They have raised money through issuance of listed NCDs from mutual funds and plan to further diversify borrowing by borrowing from DIIs and exploring ECBs in the future.
→There is no specific mention of any imminent fundraising through equity.
→The company prefers to retain profits for growth and is capital-hungry, implying future capital raises could happen as growth demands but no clear immediate equity fundraising plans shared.

Order book

The provided transcript from SBFC Finance Limited does not explicitly mention details about the current or expected order book or pending orders. The discussion primarily focuses on financial performance, growth guidance, asset quality, loan book composition, branch operations, technology investments, and regulatory impacts. Therefore, there is no specific information available in the document regarding the company's order book or pending orders.

Capex plans

→In FY24, SBFC Finance Ltd. made significant IT investments including upgrading their Loan Origination System (LOS), Learning Management System (LMS), data warehouse, disaster recovery/business continuity plan (DR/BCP), and achieving ISO certification.
→They also enhanced security infrastructure and implemented Sentinel for data protection.
→For the near future, there are no material further IT investments planned; it will be business as usual with maintenance and health investments continuing.
→The company has applied for an HFC (Housing Finance Company) license but does not have concrete plans or timelines until regulatory approval is obtained.
→Capital allocation remains focused on growing the core MSME and gold loan businesses organically, with no indication of major strategic or capital investments beyond current operational upgrades.

How does SBFC Finance Ltd rank vs peers in Finance?

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1SBFC Finance Ltd

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