SG Finserve Ltd Management's Take

• 📊 Strong Growth: Loan book up 15% QoQ and 250% YoY, supported by disbursements of INR 11,130 crore (+39%).
• 💰 Income & Profit: Operating income at INR 142.31 crore (+91% YoY), PAT at INR 52.92 crore (+58% YoY).
• 🛡️ Asset Quality: Maintaining NIL gross NPAs, ensuring portfolio stability.
• 🏦 Geographic & Client Base: Presence in 25 locations; 87% secured loans backed by inventory and receivables with marquee corporate anchors.
• ⚡ Operational Efficiency: Cost-to-income ratio expected to decrease from 70 to 55 basis points due to digital initiatives.
• 🚀 Future Targets: AUM goal of INR 6,000 crore by FY27; PBT target of INR 250 crore; NIM goal of 12-13% and ROE target >15%.
• 🔄 Leadership Transition: Management changes planned with new CEO and CFO, emphasizing smooth business continuity.
• ⚠️ Guidance Revision: FY26 PAT downgraded to INR 120-125 crore amid cautious macroeconomic outlook.

📊 Financial Performance Highlights:

• The loan book stood at INR 2,878 crore in Q2 FY26, up 15% quarter-on-quarter and a substantial 250% year-on-year, indicating rapid growth.
• Operating income increased by 11% sequentially to INR 74.72 crore, with net interest income ticking up 4% to INR 44.39 crore.
• Profit before tax grew 14% QoQ to INR 38.44 crore and PAT rose 16% to INR 28.40 crore, demonstrating improving profitability.
• Gross NPAs remained nil, maintaining strong asset quality.

🚀 Strategic Operational Developments:

• Emerging as a key player in MSME supply chain finance, supporting over 1,000 MSMEs with cumulative disbursements exceeding INR 52,000 crore.
• Operates a proprietary digital platform for invoice discounting and credit scoring; planning to deploy an AI-driven Credit Monitoring Tool by December 2025 to enhance risk assessment.
• Geographic presence across 25 locations, with North India contributing 41% of the loan book.
• Maintains MOUs worth INR 6,550 crore with marquee corporate anchors including TATA Group and Vedanta, supporting secured lending strategies.

🔮 Future Growth and Guidance:

• Targets an Asset Under Management of INR 6,000 crore by FY27.
• Plans to grow the loan book to INR 5,000 crore over the next 2-3 years, with expected 10% quarter-on-quarter earnings growth.
• Funding strategy includes INR 338 crore equity from warrant conversions by April 2026, alongside increasing banking limits to INR 4,500 crore with leverage of 1:3.
• Aims to elevate Net Interest Margin (NIM) to 12-13% and Return on Equity (ROE) beyond 15%, targeting 18-19% through direct retailer financing.

⚠️ Risks and Concerns:

• Revised FY26 PAT guidance downgraded to INR 120-125 crore from INR 150 crore due to macroeconomic conditions and conservative NPA management.
• Management transitions with CEO and COO/CFO departures; new CEO with 20+ years' experience to join in November. Leadership changes emphasize business continuity.

🔍 Additional Information:

• Strong credit ratings: AA(CE)/A1+ from CRISIL and ICRA.
• Employee engagement includes sharing in business wealth creation.
• Reduced vendor financing exposure for mid-corporate clients, focusing on dealer financing to mitigate risks.