SG Finserve — Q4 FY26 earnings call

Call held 16 Apr 2026

Management summary

SG Finserve reported an excellent Q4 FY26, with significant year-on-year growth across operating income, loan book, and profit after tax. The company's core supply chain finance model, backed by strong digital capabilities and a focus on nil NPAs, continues to drive performance. Management outlined ambitious growth targets for AUM and profitability, supported by ample capital and bank lines, while remaining vigilant on market risks.

Highlights

  • Operating income grew 96% YoY to INR 334 crores, demonstrating strong top-line performance.

  • Loan Book reached an all-time high of INR 3,936 crores, marking a 75% YoY growth.

  • Profit after tax for FY26 increased by 58% YoY to INR 128 crores, with Q4 PAT showing a 30% sequential growth to INR 42 crores.

  • Gross disbursements for the full year surpassed INR 25,000 crores, highlighting robust digital and invoice financing capabilities.

  • The company maintains a nil NPA target, supported by its supply chain finance model and early warning systems.

Key financials

3 periods

Headline

  • Operating Income
    ₹334 Cr
    YoY +96%
  • Loan Book (Closing)
    ₹3,936 Cr
    YoY +75%
  • Factoring Book Outstanding (Mar 31)
    ₹175 Cr

Q4 FY26

  • PAT
    ₹42 Cr
    QoQ +30%
  • Average AUM
    ₹3,265 Cr
  • ROA
    4.8%
  • Fee Income
    ₹6.23 Cr

FY26

  • PAT
    ₹128 Cr
    YoY +58%
  • Gross Disbursements
    ₹25,000 Cr
  • Average AUM
    ₹2,640 Cr
    YoY +105.9%

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.

Capital allocation

high confidence
  • Liquidity Undrawn ₹3,000 Cr The company has INR 1,481 crores in equity, with an additional INR 21 crores from warrants converted in April. Current leverage is 1.9x, with a comfortable target of 3x, allowing for significant AUM growth without fresh equity.
    We currently have enough bank lines available with us which are not fully utilized. We have space available in the existing available limits itself to utilize further. It is more than INR 3,000 crores. It will be somewhere between INR 3,000 to INR 3,500 crores, number one. Number two, our leverage currently is 1.9x. If you were to compare us with any other NBFC, I think the leverage of 3x to 4x is acceptable leverage for the NBFC business. But we understand we are in the initial stage of our growth, so that's why we are going little conservative. But there is enough headroom left to leverage ourselves without being dependent on any fresh equity raise. So basically, as per my understanding, with the bank limits you have of approximately 3,000, 3,500 and the capital we have of 1,500, so we are well, basically we can reach a AUM of INR 6,000 to INR 7,000 easily without asking for additional capital, right, sir, if I am not wrong?

Guidance & targets

AUM Growth

  • AUM growth AUM Growth · FY27 · High confidence 35%-40%
    Our aspiration on the AUM for FY '27 is around 35%-40% growth.

    — Vinay Gupta

  • AUM growth AUM Growth · medium to long term · High confidence 25%-30%
    But in a medium to long term, this will be the average of 25% to 30%.

    — Vinay Gupta

AUM

  • AUM target AUM · 3-4 years · High confidence INR 10,000 crores
    INR 10,000 crores is our internal target. INR 10,000 crores of AUM we can easily reach in three to four years without being dependent on any fresh equity, because we will accumulate profits also and there is a enough bank lines available and more bank lines will get added. So for INR 10,000 crores AUM with 3x leverage, we are not dependent on any fresh equity.

    — Vinay Gupta

Leverage

  • Leverage Leverage · 2-3 years · High confidence 3x
    As a management, we think we can go up to 3x. But that will happen over a period, in phase manner, maybe 2 years to 3 years.

    — Vinay Gupta

Profitability

  • ROA Profitability · ongoing · High confidence 4.5%-5%
    On the ROA, I think 4.8% is a very healthy ROA. Anything more than this is not desirable, it can go up to 5%. But, ROA will range between 4.5% to 5% depending the leverage levels because if our leverage goes up, the ROA tends to go down, and the ROE tends to go up. So 4.5% to 5% range will be our ROA, that is the kind of number we have in our mind.

    — Vinay Gupta

  • ROE Profitability · ongoing · High confidence 14%-16%
    On Profitability, we shall operate with return on asset of 4.5% to 5% kind of a range, with return on equity of 14% to 16% kind of a range, and cost to income between 13% to 17%.

    — Vinay Gupta

  • PAT growth Profitability · future · High confidence 30%-35% CAGR
    Yes, it says 30%-35% CAGR, that is the PAT guidance.

    — Vinay Gupta

Efficiency

  • Cost to Income Efficiency · ongoing · High confidence 13%-17%
    On Profitability, we shall operate with return on asset of 4.5% to 5% kind of a range, with return on equity of 14% to 16% kind of a range, and cost to income between 13% to 17%.

    — Vinay Gupta

Asset Quality

  • NPA Asset Quality · ongoing · High confidence Nil
    That is why our guidance on NPAs continues to be nil. We would want to operate, keeping fingers crossed, without incurring any delinquency.

    — Vinay Gupta

What to watch in Q1 FY27

TReDS factoring business go-live

Q1 FY27
Current Onboarded RXIL and M1xchange, evaluating leads
Target Go-live in Q1 FY27

Why it matters

Indicates the operationalization of a new business line and potential for additional revenue streams.

On the TREDS, we have already onboarded two TReDS platforms, RXIL and M1xchange. We are evaluating the leads and soon we will go live in terms of booking TREDS factoring business. I think this Q1 only.

Risks & concerns

  • Potential stress from ongoing geopolitical issues

    medium

    Management is vigilant and engaging with borrowers and anchors to mitigate potential impacts, but no immediate stress is observed.

    Management acknowledged

  • Industry slowdowns (e.g., steel) due to external factors

    medium

    Analyst raised concerns about sectors like steel. Management noted that reduced imports could benefit domestic players, and the overall impact is still evolving.

    Analyst acknowledged

Q&A highlights

7 direct
Competitive advantage and nil NPA strategy Direct
Our core business is supply chain finance and the inherent strength of supply chain finance is that, it has a tripartite relationship between the anchor, borrower, and the financer. For us, the advantage is this: our core business is supply chain, which is more than three-fourths of our business. So that adds to our advantage.

Analyst questioned how the company maintains nil NPAs, and management explained the inherent strengths of their supply chain finance model, including short-term, invoice-backed loans, direct payments, and an early warning system.

Asked by Abhi Jain

Scalability of Grade A anchor-based business model Direct
The scalability in this space is huge. Out of top 500 corporates, if we talk about, not even 100 are active in a supply chain space. So there is a huge space for the new anchors to follow the trend of the successful anchors to come and start doing supply chain, number one. Number two, the anchors who are already doing supply chain, their entire sales is not yet covered.

Analyst questioned if the nil NPA strategy is sustainable with growth, and management clarified the vast untapped market potential within supply chain finance, indicating significant room for expansion with Grade A anchors.

Asked by Abhi Jain

Employee benefit expense increase Direct
No, Kushal, the INR 2.5 crores which you referred was not related to this financial year, it was previous year. If you read, this INR 2.5 crores is mentioned as a footnote, is related to period ended March 31st 2025. Okay, okay. So it is only INR 1.5 crores addition in the employee cost in this current quarter, right?

Analyst sought clarification on a perceived three-fold jump in employee costs, which management clarified was due to a prior year's footnote, with the actual current quarter addition being much smaller.

Asked by Kushal Jajodia

Funding for future AUM growth and leverage strategy Direct
We currently have enough bank lines available with us which are not even fully utilized. We have space available in the existing available limits itself to utilize further. It is more than INR 3,000 crores. It will be somewhere between INR 3,000 to INR 3,500 crores, number one. Number two, our leverage currently is 1.9x. If you were to compare us with any other NBFC, I think the leverage of 3x to 4x is acceptable leverage for the NBFC business.

Analyst inquired about future capital needs for AUM growth, and management confirmed sufficient unutilized bank lines and headroom to increase leverage to 3x, allowing significant growth without immediate fresh equity.

Asked by Kushal Jajodia

TReDS platform strategy and go-live timeline Direct
On the TREDS, we have already onboarded two TReDS platforms, RXIL and M1xchange. We are evaluating the leads and soon we will go live in terms of booking TREDS factoring business. I think this Q1 only. No, no. We don't plan to have TREDS platform. We will only participate on existing TReDS regulated entities licensed by RBI.

Analyst asked about the company's TReDS strategy, and management clarified they will use existing RBI-licensed platforms and expect to go live in Q1 FY27, not build their own.

Asked by Parin Gala

ROA trajectory and historical context Direct
Our leverage was virtually zero for six months in last financial year, which is why the ROA appears very high. But on absolute terms, if you look at the profitability, the net interest income, the PBT, everything has gone up. Our absolute interest cost was low last year because our borrowing was zero for few months and we were doing business purely basis equity. So although the ROA may appear last year as you were referring to, but our return on equity was also very low in that period because the leverage was virtually zero.

Analyst questioned the ROA trend, and management explained that a seemingly higher ROA in the previous year was due to zero leverage, while absolute profitability has improved significantly this year with increased leverage.

Asked by Varun Gajaria

Significant jump in fee income in Q4 Direct
It's just because of our focus on the fee income. Honestly accepting the fact that we could have generated better fees income in Q3 given the potential we have which we have course corrected in Q4. So 6 crores fee in Q4 is not an exception. I believe, it will become a norm.

Analyst noted a substantial increase in Q4 fee income, and management attributed it to a strategic focus and correction from Q3, expecting this higher level to become a new norm.

Asked by Rajat

Stress in top sectors due to geopolitical events Partial
No, we are not seeing any stress as of today, but we are not ignoring the fact that there can be a potential stress due to ongoing geopolitical issue and we are engaging our borrowers, our anchors and we are vigilant. You are right, but if I may have a liberty to ask you a counter question. If imports of steel goes down, I think the domestic manufacturers tend to gain. So we are yet to see the impact on the domestic businesses, domestic manufacturers, domestic distributors. The impact will be positive, negative, neutral, we don't know. Things are evolving.

Analyst asked about potential stress in key sectors like steel due to geopolitical issues. Management acknowledged the vigilance but stated no current stress, suggesting potential benefits for domestic players if imports decline, indicating an evolving situation.

Asked by Akhilesh Kumar

2 min read 6 chapters

Detailed narrative

Strong Financial Performance in FY26 and Q4

SG Finserve delivered an excellent financial performance for the year ended March 31, 2026. Operating income surged by 96% year-on-year to INR 334 crores, while the Loan Book grew 75% year-on-year to INR 3,936 crores. Profit after tax (PAT) for FY26 increased by 58% year-on-year to INR 128 crores. The fourth quarter alone saw a PAT of INR 42 crores, representing a 30% sequential growth, and gross disbursements for the full year crossed INR 25,000 crores.

Robust Business Model and Nil NPA Strategy

The company's core business is supply chain finance, characterized by a tripartite relationship between anchor, borrower, and financer. This model involves purchase financing, end-use monitoring, invoice-backed loans, and direct payments to anchors, resulting in an average churn cycle of 45 days. A robust early warning system monitors dealer churning cycles, enabling proactive intervention and collaboration with anchors to maintain a nil NPA target, which is a core philosophy for the company.

Scalability and Growth Strategy

Management sees significant scalability in the supply chain finance sector, noting that fewer than 100 out of the top 500 corporates are active in this space, and only 25-30% of existing anchor sales are currently covered. The company plans to onboard new anchors, enter new industries, and expand its dealer financing, including deep-tier dealers. The factoring business, with INR 175 crores outstanding, has just commenced and is expected to grow.

Capital Structure and Leverage for Growth

SG Finserve possesses a strong capital base with INR 1,481 crores in equity, supplemented by INR 21 crores from warrants converted in April. The company has ample unutilized bank lines exceeding INR 3,000 crores. Current leverage stands at 1.9x, with a comfortable target to increase it to 3x over the next 2-3 years, which would enable AUM growth to INR 6,000-7,000 without requiring fresh equity. The long-term AUM target is INR 10,000 crores within 3-4 years.

Profitability Targets and Enhanced Fee Income

The company aims for an ROA between 4.5%-5% and an ROE of 14%-16%, with a Cost-to-Income ratio targeted at 13%-17%. Q4 FY26 witnessed a substantial increase in fee income to INR 6.23 crores, a strategic correction from Q3, which management expects to become a new norm. These fees typically range from 10 paisa to 50 paisa per disbursement, with some cases reaching 1%.

Industry Focus and Risk Vigilance

SG Finserve's primary industry focus for supply chain finance includes auto, steel, construction, white goods, and IT peripherals, with construction (35% of AUM) and automotive (~2% of AUM) being key sectors. While no immediate stress is currently observed, management remains vigilant regarding potential impacts from ongoing geopolitical issues and industry-specific slowdowns, proactively engaging with borrowers and anchors to manage risks.

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