SBFC Finance Q1 profit jumps 46.5% YoY to Rs 47 crore; stock surges 5%

SBFC Finance stock has surged 2.20 percent over the past one week. Benchmark Nifty Bank index has given a return of 1.07 percent over the same duration.

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Shares of SBFC Finance jumped nearly 5 percent in early trade on August 30, after the recently-listed company posted robust Q1 financial results. At 11:58 am, SBFC Finance stock was trading 4.82 percent higher at Rs 90.25 on NSE.

The non-banking finance company (NBFC) has recorded standalone net profit at Rs 47 crore for quarter ended June FY24, rising 46.5 percent over Rs 32 crore profit in year-ago period. Further the net interest income (NII) grew by 40.6 percent on-year to Rs 141 crore during the same quarter.

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The SBFC Finance stock got listed on August 16, 2023, and surged by 66 percent on debut after a successful initial public offering (IPO). Most experts advised holding the stock for the long term in view of the potential. The potential seen was in the MSME sector on the back of the government’s Make-in-India initiative, the ‘Atmanirbhar Bharat’ mission along with the NBFC sustaining a robust business model, strong financial performance, and stable asset quality.

Incorporated in 2008, SBFC Finance is a non-deposit-taking NBFC that offers loans including secured MSME loans, and loans against gold primarily to entrepreneurs, small business owners, self-employed individuals, and salaried and working-class individuals. It has an extensive pan-India network in over 157 branches in 105 cities across 16 states and two union territories.

Also Read: SBFC Finance surges 66% on debut: Should you book profits or hold the stock?

IPO details & expert views

The Rs 1,025-crore primary offering of the shadow lender received a robust response from the investors during bidding and was subscribed more than 74 times overall.

The IPO sold in the range of Rs 54-57 apiece with a lot size of 260 shares between August 3 and 7. The category for qualified institutional bidders was booked 203.61 times, while the non-institutional investors’ portion was subscribed 51.82 times. The quota reserved for retail investors was subscribed 11.60 times, while the employee portion fetched 6.21 times bids.

Analysts mostly had a positive view on the issue, advising investors to subscribe to the IPO with a long-term vision, citing its pan India network, strong return ratios, superior business model and lower cost of funds. However, they had also flagged risks of higher valuations and rate sensitive factors as the key risks for the company.

“Considering all the rationale, we expect a listing gain of around 35-40 percent against the 65-70 percent expected earlier over the final IPO price, given the subdued market mood,” Prashanth Tapse, Research Analyst & Senior VP, Research, Mehta Equities said.

Meanwhile Astha Jain, senior research analyst at Hem Securities, also expected SBFC to list at a robust premium with healthy future prospects. For the year ending March 2023, the company’s revenues stood at Rs 740 crore. The net profit for the period came in at Rs 149.7 crore.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.