SBFC Finance makes strong start on stock exchange, Shares list at 44% Premium!

In today’s session, shares of SBFC Finance were priced at a significant premium of 43.84%. The stock began trading on the NSE for Rs 82 over the IPO price of Rs 57 per share. In the meantime, it was listed on BSE for Rs 81.99 per share. 

Currently it is trading at Rs 90.05, up by 57.98% from the IPO price. It has touched day high of Rs 91.50 and day low of Rs 81.99. So far 72,00,595 shares were traded over the counter at the BSE. The BSE ‘B’ stock has market capitalization of around 9,600 crores.  

With an emphasis on loans with ticket sizes between Rs 5 lakh and Rs 30 lakh, SBFC Finance Ltd (SFL) is a systemically important non-deposit taking non-banking financial organization that provides loans including secured loans for micro, small and medium sized enterprises and loans against gold. As of March 31, 2023 it had 152 branches and a presence in 120 cities in 16 Indian states and two union territories. 

SFL has one of the greatest asset under management (AUM) growth rates among Indian NBFCs with a concentration on MSME with a CAGR of 44% from FY19 to FY23. It also had strong disbursement growth between FY21 to FY23 with a CAGR of 40%. From the expected 70 million MSMEs in India only 16.9 million have registered on UDYAM as of June 20, 2023 leaving a significant percentage of MSMEs without access to organized finance because they were not registered. 

SFL provided services to 1,02,722 clients in tier II and tier III cities as of March 31, 2023. For the FY21, FY22 and FY23 it had an average borrowing cost of 8.11%, 7.65% and 8.22% respectively. In FY21, FY22 and FY23 it has net interest margin (NIM) of 11.73%, 9.39% and 9.32%.  

In FY21 the company reported total income of Rs 511.53 crore and net profit of Rs 85.01 crore. This was followed by a growth of 3.75% in total income to Rs 530.7 crore in FY22, but a decline of 24.10% in net profit to Rs 64.52 crore. However, the company bounced back strongly in FY23 with a growth of 39.51% in total income to Rs 740.36 crore and a whopping 132.08% jump in net profit to Rs 149.74 crore. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.