SBFC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.0

📊 SBFC Finance shows strong growth and valuation metrics, but its high leverage and modest return ratios limit its rating. It’s a promising long-term play in the MSME lending space.

📈 Financial Overview

• Quarterly Profit: PAT rose from ₹94.4 Cr to ₹101 Cr — a 28.2% QoQ growth.
• ROE & ROCE: Both at 11.6% — decent but not industry-leading.
• EPS: ₹3.39 — supports current valuation.
• Debt Ratio: Debt-to-equity at 1.65 — high, typical for NBFCs.

💹 Valuation Metrics

• P/E Ratio: 34.0 — premium over industry average of 22.6.
• P/B Ratio: 3.9 — reflects investor optimism.
• PEG Ratio: 0.46 — indicates undervaluation relative to growth.
• Intrinsic Value: Estimated near ₹125–130, suggesting current price of ₹115 is fair with upside.

🏢 Business Model & Competitive Edge

• SBFC Finance is a systemically important NBFC focused on secured MSME loans and gold-backed lending.
• It serves underserved segments like small business owners and self-employed individuals, with high AUM growth (46% CAGR from FY19 to H1 FY25)

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📉 Entry Zone & Holding Guidance

• Entry Zone: ₹108–115 range is reasonable; RSI (56.5) and MACD (1.69) show neutral momentum.
• Long-Term Holding: Suitable for 2–4 year horizon due to strong AUM growth and MSME focus.

✅ Positive

• Strong quarterly profit growth (28.2%).
• PEG ratio of 0.46 suggests undervaluation.
• High AUM growth (46% CAGR) in MSME segment.

⚠️ Limitation

• High debt-to-equity ratio (1.65) — typical for NBFCs but adds risk.
• ROE and ROCE at 11.6% — below top-tier benchmarks.
• Stock trades at 3.9x book value — premium pricing.

📉 Company Negative News

• No major negative news, but high leverage and lack of dividend payout may concern conservative investors.

📢 Company Positive News

• Consistent profit growth and strong AUM expansion in MSME lending space

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🌐 Industry

• NBFCs serving MSMEs are benefiting from formalization and credit demand in India.
• Industry P/E is 22.6 — SBFC trades at a premium due to growth and niche positioning.

🧾 Conclusion

• SBFC Finance is a high-growth NBFC with strong fundamentals and a scalable MSME-focused model.
• Valuation is slightly premium, but PEG and profit growth support long-term investment.

Sources

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