Subscribe to SBFC Finance: Geojit

Geojit IPO report on SBFC Finance

SBFC Finance Ltd. (SBFC), headquartered in Mumbai, is a systemically important nondeposit- taking non-banking finance company (NBFC) offering Secured MSME loans (80% of AUM), Loans against Gold (17%), and unsecured loans (3%). The company focuses on disbursing loans with a ticket size in the range of Rs.0.5 million to Rs.3.0 million, and as of March 31, 2023, 87.27% of their AUM had a ticket size within this range. Between FY23 and FY25, NBFC credit is projected to witness a growth rate of 12% to 14%, driven by the retail vertical, comprising home, car, and microfinance segments (Source: CRISIL Report). SBFC has undertaken a Pre-IPO Placement of 27,272,727 equity shares at a price of Rs.55/- per share, aggregating to Rs.150cr, to Amansa Investments. The company has an AUM of Rs.4,943cr and is well diversified across India, with 31% in the North, 38% in the South, and 31% in the West and East.

Valuation and Outlook

At the upper price band of Rs.57, SBFC is available at a P/B of 2.6x (FY23), lower than industry peers' valuations. Considering the lower valuation, consistent improvement in asset quality, and decent business performance, we assign a “Subscribe” rating for the issue on a short-to medium-term basis.