SG Finserve — Q3 FY26 earnings call

Call held 23 Jan 2026

Management summary

SG Finserve delivered strong financial and operational performance in Q3 FY26, achieving record loan book growth and significant profit increases. The company maintained robust asset quality with nil NPAs and healthy profitability ratios. Strategic initiatives include expanding supply chain financing with a new factoring license and exploring new business verticals, though these are currently in the ideation phase. Management addressed analyst concerns regarding guidance consistency and communication clarity.

Highlights

  • Loan book reached an all-time high of INR 3,210 crores as of December 31, 2025, growing 12% QoQ.

  • Profit After Tax (PAT) for Q3 FY26 stood at INR 32 crores, reflecting a 15% QoQ growth.

  • For the nine months ended December 2025, PAT was INR 85 crores, marking a 49% YoY growth.

  • Supply chain financing constitutes approximately 70% of the AUM.

  • The company maintains a cost-to-income ratio of less than 15% and reported nil NPAs.

  • Annualized Return on Assets (RoA) for the first nine months was 4.4%, and Return on Equity (RoE) was 10.5%.

  • Equity base is approximately INR 1,100 crores with leverage nearing 2x.

  • RBI has granted a license to commence factoring business.

Concerns

  • Inconsistent and confusing guidance

Key financials

4 periods

Headline

  • Loan Book (AUM)
    ₹3,210 Cr
    QoQ +12%
  • Cost-to-Income Ratio
    15%
  • Equity Base
    ₹1,100 Cr
  • Total Liquidity (Cash & FDs)
    ₹38 Cr

Q3 FY26

  • PAT
    ₹32 Cr
    QoQ +15%

9M Annualized

  • Return on Assets
    4.4%
  • Return on Equity
    10.5%

9M FY26

  • PAT
    ₹85 Cr
    YoY +49%

What they filed

Q1 FY27: revenue up 100.0%, net profit up 116.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue31 42 54 68 75 +142%86 +105%105 +94%136 +100%
Net profit14 24 24 25 28 +100%32 +33%42 +75%54 +116%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Supply Chain Financing
    70% Share of AUM
  • Non-Supply Chain Financing
    30% Share of AUM

Capital allocation

high confidence
  • Debt Debt disclosed
    Currently, our leverage is 2x, with INR 1,100 crores of equity base. Additional equity of INR 338 crores is expected by April and with accruals of Q4 put together, I think we are looking to have an equity base of somewhere between INR 1,450 crores to INR 1,500 crores as we begin the new financial year. On the AUM side, as I said, we are looking to grow at only 20% CAGR and as of today, our leverage is only 2x. However, as part of our Board approvals, we already have INR 5,000 crores of borrowing plans approved. We are currently dealing with 18 banks and two mutual funds for our borrowing. So, we have ample room available with us to grow our balance sheet. If we were to leverage ourselves from 2x to 3x, then the resultant return on equity will also be higher. However, we would like to play little conservative, considering we are at initial stage of our operations.
  • Liquidity Cash ₹38 Cr Total liquid cash and fixed deposits currently held by the company.
    One more question I had. I had actually checked the financials of FY '25, okay? So, there was a fixed deposit of around INR30 crores, and there were mutual funds at that time. So, what is the current status of the liquid cash as on date, basically, while we are speaking to you? The FDs, how much is the liquid assets to the tune of lying in the FD and the mutual fund? INR 38 crores. Both of them, right, sir? INR 38 crores is the total liquidity we have currently.

Guidance & targets

Loan Book

  • Loan Book (AUM) Size Loan Book · by March 2030 · High confidence INR 7,500 crores
    On the loan book size for the next four years, we look to grow at 20% CAGR to take the book to INR 7,500 crores by March 2030.

    — Vinay Gupta

  • Annual Loan Book (AUM) Addition Loan Book · every year (post FY26) · High confidence INR 1,000 crores

    Previously INR 500 crores → INR 1,000 crores

    But see, I mean, this year, we're going to close our AUM at INR 3,500 crores. And then every year, we're going to increase it by INR 1,000 crores, not INR 500 crores.

    — Anubhav Gupta

  • Loan Book (AUM) Target Loan Book · in next 12 months · High confidence INR 4,500 crores
    Right now, the focus is to achieve INR 4,500 crores loan book in next 12 months. That's the idea.

    — Anubhav Gupta

  • Loan Book (AUM) Target Loan Book · by March 2027 · High confidence INR 4,500 crores

    Previously INR 6,000 crores → INR 4,500 crores

    Every year, INR 1,000 crores is targeted to be added. Kushal, you are assuming that March '27 continues to be INR 6,000 crores, that's why you're calculating addition of INR 500 crores from thereon, but that's not the case. We have reduced March'27 also. So we are talking about 20% CAGR from March '26 to March '30.

    — Anubhav Gupta

Profitability

  • Profit Before Tax (PBT) Profitability · in FY30 · High confidence INR 500 crores
    However, from the profitability perspective, the CAGR is targeted to be around 30% during the same period, so that we achieve Profit Before Tax of INR 500 crores in FY30, which will translate to return on assets of around 5% and return on equity of around 15%.

    — Vinay Gupta

  • Return on Assets (RoA) Profitability · by FY30 · High confidence around 5%

    — Vinay Gupta

  • Return on Equity (RoE) Profitability · by FY30 · High confidence around 15%

    — Vinay Gupta

Asset Quality

  • Non-Performing Assets (NPAs) Asset Quality · ongoing · High confidence Zero NPA
    We don't want any NPA, and that's the beauty of, running an NBFC. During 2022 to 2026, we have done gross disbursements of INR 50,000 crores to INR60,000 crores, we are sitting on zero NPAs.

    — Vinay Gupta

Business Strategy

  • Factoring Business Growth Business Strategy · initially · Medium confidence baby steps
    We are not looking to grow very aggressively on the factoring initially. We would like to take baby steps, then learn, then build.

    — Vinay Gupta

What to watch in Q4 FY26

Loan Book (AUM) Growth

Next quarter (Q4 FY26 results)
Current INR 3,210 crores (Dec 31, 2025)
Target Progress towards INR 3,500 crores (expected Mar 2026) and INR 4,500 crores (by Mar 2027)

Why it matters

Verifying if the company is on track with its stated annual loan book addition target of INR 1,000 crores and the Mar 2026 expectation.

But see, I mean, this year, we're going to close our AUM at INR 3,500 crores. And then every year, we're going to increase it by INR 1,000 crores, not INR 500 crores.

Risks & concerns

  • Inconsistent and confusing guidance

    high

    Multiple analysts highlighted that the guidance has changed frequently and the current linear growth targets seem conservative or confusing given the company's potential and new initiatives.

    Analyst acknowledged

  • Diversification into new business lines (ARC, AIF, Insurance Broking, FinTech) without clear plans

    medium

    Analysts expressed concern that exploring multiple new verticals could dilute focus from the core supply chain finance business and risk becoming a generic NBFC without a clear competitive edge.

    Analyst downplayed

  • Impact of management transition on growth and strategy execution

    medium

    Management stated that the new team needs time to settle in, which influenced the conservative guidance provided.

    Management acknowledged

Q&A highlights

5 direct
Consistency and rationale behind revised guidance Partial
So, now it's just that we are being a bit conservative, while giving guidance. And once we achieve these numbers, there is no harm in upgrading the guidance.

Multiple analysts challenged the credibility and linearity of the guidance, suggesting it might create dissonance or be too conservative given the company's potential. Management acknowledged the confusion and promised better communication.

Asked by Shubham, Sangeeta Purushottam, Punit Mittal

New business verticals (ARC, AIF, Insurance Broking, FinTech) and their strategic fit/timing Direct
This is a very broad-based idea. I mean, no development as of now. It's just a broader vision... No action is being taken as of now and we are still, few quarters away. Right now, the focus is to achieve INR 4,500 crores loan book in next 12 months.

Analysts were concerned about diversification diluting focus from the core supply chain finance business, especially with new management and revised guidance. Management reassured that core business remains the priority and these are ideation-stage.

Asked by Kushal Jajodia, Sangeeta Purushottam, Akhilesh Kumar

Funding for new subsidiaries and share warrant conversion Direct
That's right.

Clarifies the source of funding for future strategic initiatives and the timeline for strengthening the balance sheet.

Asked by Kushal Jajodia

Conversion of MOUs to AUM and associated timelines Direct
It's a long gestation, but it also depends upon the nature of the program... The build-up gestation generally takes around a year to be at a meaningful stage of the MOU.

Provides insight into the operational cycle and conversion efficiency of the business pipeline.

Asked by Daksh Jain

Current liquidity position (cash and fixed deposits) Direct
INR 38 crores is the total liquidity we have currently.

Provides a snapshot of the company's immediate cash position.

Asked by Kushal Jajodia

Communication strategy regarding guidance and new plans Direct
Fair enough. We will be more prudent and we will improve ourselves. Promise from our side.

Analysts expressed confusion and concern about the clarity and consistency of management's communication, highlighting a need for better investor relations.

Asked by Akhilesh Kumar, Punit Mittal

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

SG Finserve reported a strong Q3 FY26, with its loan book reaching an all-time high of INR 3,210 crores as of December 31, 2025, marking a 12% quarter-on-quarter growth. Profit After Tax (PAT) for the quarter stood at INR 32 crores, growing 15% QoQ. For the nine months ended December 2025, PAT was INR 85 crores, representing a 49% year-on-year increase. The company maintained a robust asset quality with nil NPAs and a low cost-to-income ratio of less than 15%.

Strategic Growth Outlook and Targets

The company has set ambitious long-term targets, aiming for a loan book of INR 7,500 crores by March 2030, representing a 20% CAGR. Profit Before Tax (PBT) is targeted to reach INR 500 crores in FY30, growing at a 30% CAGR. This is expected to translate into a Return on Assets (RoA) of approximately 5% and Return on Equity (RoE) of around 15% by FY30. Management also guided for an annual loan book addition of INR 1,000 crores post FY26, targeting INR 4,500 crores by March 2027.

Capital Adequacy and Funding Strategy

SG Finserve is well-capitalized with an equity base of approximately INR 1,100 crores and a conservative leverage nearing 2x. The company expects an additional INR 338 crores in equity by April, bringing the total equity to INR 1,450-1,500 crores by the start of the new financial year. Approved borrowing plans amount to INR 5,000 crores, with funding sourced from 18 banks and 2 mutual funds. Management emphasized a conservative approach, aiming not to exceed a leverage of 2.5x-3x.

New Business Initiatives and Factoring License

The company recently received an RBI license to commence factoring business, which is expected to strengthen its supply chain financing offerings. While this is a new area, management indicated a cautious 'baby steps' approach, not aiming for aggressive growth initially. Additionally, the board has approved exploring four new subsidiaries in areas like ARC, AIF, Insurance Broking, and FinTech. However, these are currently in the ideation and drawing board stages, with no immediate investment or concrete action planned.

Management Transition and Guidance Revisions

Management acknowledged that the company has undergone significant changes, including a new leadership team and past issues with license renewal. These factors have led to a more conservative guidance approach. Analysts raised concerns about the frequent revisions and linearity of targets, which management attributed to the new team settling in and a philosophy of under-promising and over-delivering. Management committed to improving communication clarity in future disclosures.

Asset Quality and Core Business Focus

SG Finserve continues to prioritize robust asset quality, reporting nil NPAs. Supply chain financing remains the core strength, contributing approximately 70% of the AUM. The remaining 30% comes from non-supply chain business loans, including LAP and LAS, which are described as highly secured. The company's strategy focuses on deepening engagement with Tier 2 dealers and expanding its product offerings within the existing ecosystem, while maintaining a disciplined approach to risk.

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