SBFC - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.6

📊 Financials: SBFC Finance has reported quarterly PAT of ₹109 Cr vs ₹101 Cr previously, showing steady growth (+30% variation). EPS at ₹3.61 supports earnings visibility. ROE at 11.6% and ROCE at 11.6% reflect moderate capital efficiency. Debt-to-equity ratio of 1.80 indicates high leverage, typical for NBFCs but adds risk. Dividend yield is 0.00%, offering no income support.

💹 Valuation: Current P/E of 29.2 is above industry PE of 21.2, suggesting premium valuation. Book value ₹31.4 vs CMP ₹104 implies a high P/B multiple (~3.3x). PEG ratio of 0.39 highlights valuation aligned with earnings growth, offering some comfort. Intrinsic value appears slightly lower than CMP, signaling caution despite growth momentum.

🏦 Business Model: SBFC operates as a non-banking financial company (NBFC), focusing on secured loans, SME financing, and retail credit. Competitive advantage lies in niche lending, strong distribution, and growing demand for credit in underserved segments. Risks include high leverage, credit quality concerns, and regulatory oversight.

📈 Entry Zone: Technically, support lies near ₹95–₹100. CMP at ₹104 is below DMA 50 (₹108) and close to DMA 200 (₹105), indicating consolidation. Entry is advisable closer to ₹95–₹100 for margin of safety.

📌 Long-term Holding: Strong growth, niche positioning, and rising credit demand make SBFC attractive for long-term holding. However, high leverage and premium valuation require cautious accumulation, preferably on dips.

Positive

• 📈 Quarterly PAT growth (+30%) shows improving earnings momentum.
• 📊 ROE (11.6%) and ROCE (11.6%) reflect moderate capital efficiency.
• 🏦 Niche NBFC model with strong presence in SME and retail lending.
• 📉 PEG ratio of 0.39 highlights valuation aligned with earnings growth.

Limitation

• ⚠️ High debt-to-equity ratio (1.80) adds financial risk.
• 📉 P/E ratio (29.2) above industry average (21.2), indicating premium valuation.
• 💸 No dividend yield (0.00%) offers no income support.
• 📉 CMP below DMA 50 and near DMA 200 indicates technical weakness.

Company Negative News

• 📉 Decline in FII holdings (-0.11%) signals reduced foreign investor confidence.

Company Positive News

• 📈 Increase in DII holdings (+1.22%) shows strong domestic institutional support.

Industry

• 🏦 NBFC sector trades at industry PE of 21.2, highlighting SBFC’s premium valuation.
• 📊 Industry growth supported by rising SME financing and retail credit demand.

Conclusion

⚖️ SBFC Finance is fundamentally strong with steady growth and niche positioning, but high leverage and premium valuations limit attractiveness. Entry is advisable near ₹95–₹100 support zones. Long-term holding is justified, but accumulation should be cautious unless profitability improves further and leverage reduces.

Would you like me to extend this with a peer benchmarking overlay against NBFC peers like Muthoot Finance and Manappuram Finance to highlight comparative valuation and efficiency?