SG Finserve Limited — Q3 FY26 earnings call

Call held 23 Jan 2026

Management summary

SG Finserve Limited reported a strong Q3 FY26, achieving record loan book growth and robust profitability with nil NPAs. The company outlined ambitious long-term growth targets for its loan book and profitability. However, the call was marked by analyst concerns regarding the consistency of guidance and the clarity of plans for new business ventures, prompting management to acknowledge the need for improved communication.

Highlights

  • Loan book reached an all-time high of INR 3,210 crores as of December 31, 2025, registering quarter-on-quarter growth of 12%.

  • Profit after tax for Q3 stood at INR 32 crores, reflecting quarter-on-quarter growth of 15%.

  • For the nine months ended December, PAT was INR 85 crores with year-on-year growth of 49%.

  • Delivered return on assets of 4.4% and return on equity of 10.5% on an annualized basis for the first nine months.

  • Maintained a highly disciplined NBFC with cost-to-income ratio of less than 15% and nil NPAs.

Concerns

  • Frequent revisions in long-term guidance and conservative targets led to investor confusion and perceived 'dissonance' within the management team.

  • Lack of clear communication regarding the immediate plans, investment, and timelines for the newly approved exploration of four new subsidiaries (ARC, AIF, Insurance Broking, FinTech) caused investor uncertainty.

  • Management declined to share specific cost of borrowing and yield metrics, citing competitive reasons, which analysts had requested for better transparency.

Key financials

4 periods

Headline

  • Loan Book (AUM)
    ₹3,210 Cr
    QoQ +12%
  • Cost-to-Income Ratio
    15%
  • NPAs
    0%
  • Leverage
    2×
  • MOU with Anchors
    ₹7,000 Cr

Q3

  • PAT
    ₹32 Cr
    QoQ +15%
  • Average Loan Book
    ₹2,925 Cr

9M

  • PAT
    ₹85 Cr
    YoY +49%

9M Annualized

  • RoA
    4.4%
  • RoE
    10.5%

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
  • M&A Four new subsidiaries (ARC, AIF, Insurance Broking, FinTech) Acquisition · Announced

    To augment fee-based revenue and explore new financial services; currently at drawing board stage.

    No investment planned for the next 2-3 years; focus remains on core loan book growth.

    Subject to regulatory approvals, today the board has approved our expansion plan to set up four new subsidiaries, which will further augment our fee-based revenue. Currently, it is at the drawing board stage, but the board has approved to explore and evaluate the areas of ARC, AIF, Insurance Broking, and FinTech business.
  • Liquidity Cash ₹38 Cr · Undrawn ₹5,000 Cr INR 5,000 crores of borrowing plans approved with 18 banks and two mutual funds. Current total liquidity is INR 38 crores, held in fixed deposits/bank.
    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.

Guidance & targets

Loan Book

  • Loan Book (AUM) CAGR Loan Book · next four years (to March 2030) · High confidence 20%
    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

  • Loan Book (AUM) Loan Book · March 2030 · High confidence INR 7,500 crores

    — Vinay Gupta

  • Loan Book (AUM) Loan Book · March 2026 · High confidence INR 3,500 crores
    this year, we're going to close our AUM at INR 3,500 crores.

    — Anubhav Gupta

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

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

    First idea is to grow from 3,500 in Mar'26 to 4,500 in mar'27 which is 33% growth.

    — Anubhav Gupta

  • Annual AUM Addition Loan Book · Every year · High confidence INR 1,000 crores
    Every year, INR 1,000 crores is targeted to be added.

    — Anubhav Gupta

  • Supply Chain Funding Loan Book Loan Book · by 2030 · Medium confidence INR 10,000 crores
    ample opportunity to take supply chain funding loan book to INR10,000 crores by 2030.

    — Anubhav Gupta

Profitability

  • Profit Before Tax (PBT) CAGR Profitability · same period (to FY30) · High confidence 30%
    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

    — Vinay Gupta

  • Profit Before Tax (PBT) Profitability · FY30 · High confidence INR 500 crores
    so that we achieve Profit Before Tax of INR 500 crores in FY30

    — Vinay Gupta

  • Return on Assets (RoA) Profitability · FY30 · High confidence 5%
    which will translate to return on assets of around 5%

    — Vinay Gupta

  • Return on Equity (RoE) Profitability · FY30 · High confidence 15%
    and return on equity of around 15%.

    — Vinay Gupta

What to watch in Q4 FY26

Share Warrants Funding

By April 2026
Current Expected
Target Funds received, equity base strengthened

Why it matters

Additional equity infusion is crucial for strengthening the balance sheet and supporting future growth plans, including potential new ventures.

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.

Risks & concerns

  • Investor confusion due to frequent guidance changes

    medium

    Analysts expressed concern that continuous revisions in guidance and conservative targets create 'dissonance' and make it difficult for investors to track the company's long-term vision.

    Analyst acknowledged

  • Unclear communication on new subsidiaries and strategic focus

    medium

    The announcement of exploring new subsidiaries (ARC, AIF, etc.) while simultaneously stating no immediate investment plans caused confusion about the company's strategic priorities and resource allocation.

    Analyst acknowledged

  • Potential for new ventures (e.g., ARC) to be riskier than core business

    low

    An analyst highlighted that an ARC business is inherently riskier than the current zero-NPA supply chain financing, prompting management to clarify that any new venture would only proceed if it 'fits our box' and aligns with their risk appetite.

    Analyst acknowledged

Q&A highlights

4 direct, 1 evasive
Guidance changes and consistency Partial
I mean, like I said, we can still close March 27 at INR 6,000 crores. ... It's only because of the management, no other reason.

Analysts repeatedly questioned the frequent revisions in guidance and the conservative nature of the new targets, indicating investor confusion and a need for clearer communication on strategic direction.

Asked by Shubham, Individual Investor

Strategy and investment for new subsidiaries (ARC, AIF, Insurance Broking, FinTech) Partial
This INR 400 crores, I mean, investment into like multiple new business lines, it is just a broad-based vision, Sangeeta. Over the next two years, the focus is only to build loan book and to overachieve or surpass the guidance what we gave to our investors. Nothing is going to happen like whatever you saw on Slide 14, Slide 15, it is just a broader vision.

Analysts expressed concern that the announcement of new subsidiaries, while the core business guidance was being revised, created a 'confusing picture' and diverted focus from the primary mandate of supply chain financing.

Asked by Sangeeta Purushottam, Cogito Advisors

Funding for new subsidiaries and share warrants conversion Direct
April is the due timeline, but, we might do it earlier also, although there is no compulsion on the shareholders to do it earlier. But, the idea is - if it comes early, our 31st March balance sheet will be much stronger.

Clarified the source and timeline for additional equity infusion, which is crucial for supporting growth and strengthening the balance sheet.

Asked by Kushal Jajodia, Kushal Jajodia & Associates

Disclosure of cost of borrowing and yield Evasive
Daksh, we would not be able to share that, because we are AA rated NBFC and our negotiation with our set of lenders is different; and we would not like to give that information to our peers.

Management's refusal to provide these key financial metrics limits transparency for investors in assessing the company's funding efficiency and profitability drivers.

Asked by Daksh Jain, Sagun Capital

ESOP policy approval and vesting timeline Partial
So, first we will go for the shareholder approval, Kushal. Then we will go to the remuneration committee. Then we will decide. You know, it's away from here.

Provides insight into the timeline for implementing employee incentive programs, which can impact future compensation costs and employee retention.

Asked by Kushal Jajodia, Kushal Jajodia & Associates

Strategy for the 30% non-supply chain business Direct
30% of our business is non supply chain, more like business loans, cross selling we are doing with our existing customer or their ecosystem. Because when we deal with the anchors, and dealers distributors, may not be direct borrowers, but within their ecosystem, the requirement of non-supply chain base financing comes.

Clarified the nature and target segment of the non-supply chain portfolio, reassuring analysts about its alignment with the core ecosystem and secured nature.

Asked by Punit Mittal, Ebisu Investment Advisors LLP

Timeline for MOU conversion to AUM Direct
The build-up gestation generally takes around a year to be at a meaningful stage of the MOU. Then natural growth within the MOU in terms of new leads or the enhancement from the existing dealers or the enhancement of the MOU. So, that's a natural process.

Provided clarity on the operational cycle and conversion rates of MOUs into actual disbursals, which is important for forecasting future loan book growth.

Asked by Daksh Jain, Sagun Capital

Current liquidity status (FDs, mutual funds) Direct
INR 38 crores is the total liquidity we have currently. ... No it is not margin; fixed deposits are lying in the bank. ... mutual funds are not there.

Confirmed the current cash and equivalent position, providing a clear picture of immediate financial resources.

Asked by Kushal Jajodia, Kushal Jajodia & Associates

2 min read 6 chapters

Detailed narrative

Strong Q3 FY26 Performance and Core Business Focus

SG Finserve reported an all-time high loan book of INR 3,210 crores as of December 31, 2025, marking a 12% quarter-on-quarter growth. The company's Q3 PAT stood at INR 32 crores, up 15% QoQ, contributing to a 9M PAT of INR 85 crores with 49% YoY growth. Supply chain financing remains the core strength, contributing around 70% of the AUM, with the company maintaining nil NPAs and a cost-to-income ratio below 15%. This performance translated into an annualized RoA of 4.4% and RoE of 10.5% for the first nine months.

Revised Long-Term Growth Guidance

The company provided revised long-term guidance, targeting a 20% CAGR in its loan book to reach INR 7,500 crores by March 2030. Profit Before Tax (PBT) is projected to grow at a 30% CAGR to INR 500 crores by FY30, aiming for a 5% RoA and 15% RoE. For the near term, the company expects to close FY26 with an AUM of INR 3,500 crores and target INR 4,500 crores by March 2027, implying an annual AUM addition of INR 1,000 crores.

Strategic Exploration of New Subsidiaries

The board has approved the exploration and evaluation of setting up four new subsidiaries in areas such as ARC, AIF, Insurance Broking, and FinTech to augment fee-based revenue. However, management clarified that these are currently at a 'drawing board stage' and represent a 'broad-based vision' with no material investment planned for the next 2-3 years. The immediate focus remains on building the core loan book and overachieving existing guidance.

Capital Adequacy and Funding Plans

SG Finserve is well-capitalized with an equity base of approximately INR 1,100 crores and a conservative leverage of nearing 2x. An additional equity infusion of INR 338 crores is expected by April 2026 from share warrants, which will boost the equity base to INR 1,450-1,500 crores by the new financial year. The company has approved borrowing plans of INR 5,000 crores and deals with 18 banks and two mutual funds for its funding requirements.

Analyst Concerns on Guidance and Communication

Analysts raised concerns regarding the frequent changes in long-term guidance, which they found confusing and potentially indicative of 'dissonance' within the management. Questions were also posed about the clarity of communication regarding the new subsidiaries, with analysts suggesting that announcing broad visions without concrete plans could create uncertainty. Management acknowledged these points and committed to improving communication and prudence.

Factoring Business and Non-Supply Chain Portfolio

The company recently received an RBI license for factoring business, which is intended to strengthen its supply chain financing offering, particularly in the business-to-business (B2B) segment. Management indicated a cautious, 'baby steps' approach to factoring initially. The 30% non-supply chain portfolio primarily consists of business loans, loans against property (LAP), and loans against shares (LAS) offered to existing ecosystem customers, characterized as highly secured with collateral.

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