SBFC is non-deposit taking NBFC offering loans including secured Micro, Small and Medium Enterprises loans and loans against gold, with a majority of our borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals. Among MSME-focused NBFCs in India, they have one of the highest AUM growth, at a CAGR of 40% in the period from FY 2019 to FYl 2022. They have also witnessed robust disbursement growth, at a CAGR of 39% between FY 2019 and FY 2022.
In the Indian financial system, NBFCs have grown in importance by catering to customers in underbanked regions or those who would not be catered to by traditional financial institutions, due to absence of credit history or lack of proper collateral records. Systemic credit and NBFC credit are expected to grow at 10% - 12% CAGR between FY 2023 and FY 2025. Credit growth is expected to be driven by the retail vertical, including housing, gold and auto segments. Rapid revival in the economy is expected to drive consumer demand in FY 2023, leading to healthy growth for banks and NBFCs.
Strengths And Risks
+ Pan India Presence: : They have a diversified pan-India presence, with an extensive network in 105 cities, 16 Indian states, 2 UTs, with 137 branches across the North, South, East and West zones to penetrate underbanked populace in tier II and III cities.
100% In-House Sourcing: 100% of loan portfolio has in-house sourcing through a sales team of 1,812 personnel, limiting reliance on direct selling agents and ensures direct, thorough understanding of the customer’s profile.
+ Comprehensive credit and collections Infra: : They have developed customised operating procedures for comprehensive risk management and have an in-house collections team for detecting likely default early, thus maintaining relatively low Gross NPA ratios.
+ Marquee Investors: : They are backed by marquee institutional investors such as the Clermont Group, Arpwood Group and Malabar Group, who provide their expertise to operations..
+ FInancial Performance: : Their AUM has grown from Rs 16,482 million as of FY20, to Rs 31,921 million as of FY22 and grew at a CAGR of 39% between Fiscal 2020 and Fiscal 2022.
- Default Risk: : Business has concentration of loans to MSMEs. Self-employed customers and MSMEs are often perceived to be higher risk customers posing a risk to revenue.
- Interest Rate Risk: : Business is vulnerable to interest rate risk, and volatility in interest rates, for both lending and treasury operations, could have an adverse effect on net interest income.
- High NPA Risk:: Any increase in default loans may result in high NPAs and hamper funds availability and regulatory approvals.
- High Competition: : The financial services market is highly competitive with players like traditional banks, captive finance affiliates of businesses, NBFCs and small finance banks. This impacts market share and profitability.
FAQs What is the SBFC Finance Limited IPO? +
When will the IPO open? +
What is the lot size of the IPO? +
How to apply for an IPO? +
When will the IPO be allotted? +
When is the IPO listing date? +
