SBFC Finance Ltd - Stock Valuation and Financial Performance

The company was originally incorporated on January 25, 2008 at Mumbai, India as ‘MAPE Finserve Private Limited’, a private limited company under the Companies Act, 1956, pursuant to a certificate of incorporation issued by the RoC. The Board of the company approved the change in the name of the company from ‘MAPE Finserve Private Limited’ to ‘Small Business Fincredit India Private Limited’ by their resolution dated July 3, 2017, which was thereafter approved by the Shareholders of the company through their resolution dated August 24, 2017 due to change in control in favor of the new promoters of the Company i.e. Arpwood Group and a fresh certificate of incorporation, under the Companies Act, 2013, was issued by the RoC on August 31, 2017. Thereafter, the Board of the company approved the change in the name of the company from ‘Small Business Fincredit India Private Limited’ to ‘SBFC Finance Private Limited’ by their resolution dated October 24, 2019 for the ease of reference that a shorter name provides, which was thereafter approved by the Shareholders of the company through their resolution dated December 11, 2019 and a fresh certificate of incorporation, under the Companies Act, 2013, was issued by the RoC on January 13, 2020. Subsequently, the company was converted into a public limited company under the Companies Act, 2013 and consequently the name of the company was changed from ‘SBFC Finance Private Limited’ to ‘SBFC Finance Limited’ pursuant to a resolution passed by the Board of the company on September 21, 2022 and a special resolution passed by the Shareholders of the company on September 23, 2022, and a fresh certificate of incorporation dated September 30, 2022 was issued by the RoC.

The company is a systemically important, non-deposit taking non-banking finance company (NBFC-ND-SI) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals. Among MSME-focused NBFCs in India, the company has one of the highest assets under management (AUM) growth, at a CAGR of 44% in the period from Fiscal 2019 to Fiscal 2023. It has also witnessed healthy disbursement growth, at a CAGR of 40% between Fiscal 2021 and Fiscal 2023.The company has a diversified pan-India presence, with an extensive network in its target customer segment. Its geographically diverse distribution network, spread across the North, South, East and West zones, allows it to penetrate under banked populations in tier II and tier III cities in India. Among MSME focused NBFCs, it had the lowest proportion of AUM emanating from the largest state in its portfolio as of March 31, 2023, being 17.42%, demonstrating better diversification. As a result of its active management of state concentration, it has been able to maintain low levels of AUM concentration per state despite its growth over the years. 

The company’s complete portfolio of loans has in-house origination and benefits from its risk management framework. Leveraging its significant operational experience, it has set up stringent credit quality checks and customized operating procedures that exist at each stage for comprehensive risk management. It primarily focus on small enterprise borrowers with a demonstrable track record of servicing loans such as gold loans, loans for two-wheeler vehicles. It has adopted a direct sourcing model through branch-led local marketing efforts, repeat customers or through walk-ins, which has helped it maintain contact with its customers and establish strong relationships with them, high levels of customer satisfaction and increased loyalty. Its risk management and underwriting processes, including its extensive customer assessment methods and monitoring systems, have aided its healthy portfolio quality indicators such as low rates of Gross NPAs and Net NPAs.

Business area of the company 

The company is a systemically important, non-deposit taking non-banking finance company (NBFC-ND-SI) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals

History and milestone

• 2008: Incorporation of the company.
• 2017: Investment by Arpwood Partners Investment Advisors LLP in the company.
• 2019: Investment by SBFC Holdings Pte. Ltd. in the company.
• 2021: ICRA Credit Rating for its long-term fund-based bank lines and non-convertible debentures reaffirmed as ‘A’ and outlook upgraded from Stable to Positive.
• 2022: Investment by Malabar India Fund Limited in the company.
• 2022: ICRA Credit Rating for its long-term fund-based bank lines and non-convertible debentures upgraded to ‘A +’ and outlook revised to Stable.
• 2022: Incorporation of its Subsidiary.