I can see a slight dip in the book value, was it due to dilution? What are other implication of this NCD’s
2 Likes
Given the recent business update with loan book jump from 1568 to 2345cr
expecting revenue to be between 60-70cr with financing profit ranging between 35-45cr
this should translate with an EPS of 4 to 5 for the quarter
if guidance stays intact for 4000cr book in FY26 - expect FY26 full year eps of 18-22 (approx)(after factoring dilution of QIP money)
if guidance stays intact for 6000cr book in FY27 - expect FY27 full year eps of aprox 22-30 per share.
Book value as of today with QIP money should be 1340Cr
Q4 BV accreation - 40cr
FY26 BV accreation - 200cr as per loan book guidance
FY27 BV accreation - 260cr as per loan book guidance
Total BV as per guidance by FY27 end= 1840Cr
Market cap today 2708
Fwd P/B pf FY27 = 1.5x BV - sounds reasonable to me.
Dislcosure: 10% allocated
10 Likes
What is the bad debt which they wrote off? Any idea on that?
Disc: Invested
i think its the reversal of provision which they created last quarter
Bad debt was provisioned and written off. Management seems to have pushed this without showing the account as NPA as balance sheet could support writing off.
Regardless, hypothesis of Zero NPA in Supplier Finance Business has gone sour and risks would start increasing as company moves to expand the book by going to retailer financing. Issue of bad debt was discussed/clarified by management in this quarter concall.
Disclosure:
Booked profits and looking for morer easonable valuation for reentry
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Hello vineet sir 
What are your thoughts after current Quaterly results wrt bad debt which they written off & any other pointers which get your attention after current Quaterly results & concall
Thank you sir
They are guiding for 300 CR PAT and 6000 CR AUM for Fy27.
NPAs will come alongwith. This won’t remain a Zero NPA business imv as they expand.
Hi Amit, just FYI, written off amount of 5cr is nothing when you rotate 1000cr every 45 days, so effectively, it’s 5cr on 8000cr disbursement…if that’s your pain point, you will have to re-look at how they operate.
Writeoff in 45 days is good enough than waiting for it to become true and keep supplying the supplier.
Regards
Vineet
3 Likes
Hi Vineet,
For sure the amount is less as compare to their AUM but somehow business vulnerability is reflected while management was always portraying corporate guarantee etc.
Key monitorable for me is when they go one level below with retailors financing and I am sitting on sidelines to reenter at more reasonable340-350 range as I am mostly a swing trader and the profits remain invested for long run.
2 Likes
In Sg Finserve, their spread is only 4% which is even less than major banks. As they take loan at around ~8% and lend at around ~12%. And in their ROA TREE, their interest expense is very very low which leads to ROA of 5-6% . Can anyone explain how are they able to achieve such high ROA and also able to achieve net interest margin of 9% which is excellent. Is it because of their low leverage ratio and if yes then will ROA Number will decrease drastically when their leverage increases.
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Hi Akshat,
I’m not an expert in NBFC sector. So, please consider my reply accordingly. As per my understanding SG Finserv’s recent AUM is mostly from equity. Because of some mandates from RBI, they have trim down their loans from banks and clear the necessary approvals with RBI. This happened in H2 of FY25. They also had some fund raise from promoter in that time. Now that approvals from RBI is done, they can go ahead with their borrowing. So, most of the lending is from equity in H2 FY25 and the NIM is high. And as they increase the borrowing from bank going forward to lend more the NIM might come down. This has been clarified in Q4 FY25 concall by Anubav Gupta. And the ROA also will behave accordingly, I guess.
6 Likes
Here are my workings on SG Finserve, though management is guiding 200CR PAT for FY27, i am projecting for 160-170Cr in FY27.
5 Likes
Management is guiding 300Cr PAT for FY27 as per concall.
being conservative - if its a buy on 50% of what management is guiding - imagine what happens if management meets its guidance
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My interpretation is PAT run rate will be 200 crs in FY26 and not the absolute PAT. Similarly for FY27 as well.
Invested
2 Likes
Management has guided for 18-20% ROE guidance going forward. According to your modelling, this no. Seems unachievable in next 2-3 years. Any views on ROE and ROA?
2 Likes
I am over conservative, and if by conservative , it’s still looks a buy, , then I’ll hold it.
Disclaimer - holding with average below 400
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Also, max ROE achievement will be 15-16%, I think management has also said the same 16% - I doubt 18% is achievable
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SG Finserve FY25 Results: Flat PAT, Guides for 80-90% PAT CAGR FY25-27
SG Finserve targets AUM ₹6,000 Cr revenue by FY27 with ROA expanding to 4.5-5% and ROE to 18-20%. Stock fully prices perfect execution, leaving no room for error.
PAT CAGR of 83-92% as FY24 PAT grows from ₹81 Cr to ₹270-300 Cr by FY27 based on ₹6,000 Cr of AUM with ROE of 18-20% & ROA of 4.5-5%
We are confident that we can take this loan book from INR2,300 crores to INR4,000 crores in 12 months and INR6,000 crores by FY27 and while growing this loan book, we are being very prudent that we continue to achieve ROE of 18% to 20% with ROA of 4.5% to 5%
The company’s stated growth roadmap is primarily focused on:
- Anchor deepening
- Retail/distributor lending rollout
- Technology upgrades (AI tools, ERP integration, mobile app)
- Capital infusion via warrants (₹350 Cr pending)
- Expanding bank lines and leverage up to 3:1
4 Likes