SG Finserve Limited — Q4 FY26 earnings call

Call held 16 Apr 2026

Management summary

SG Finserve Limited reported an excellent Q4 and FY26, with significant growth across operating income, loan book, and PAT. The company highlighted its robust supply chain finance model, which has enabled it to maintain nil NPAs. Management provided optimistic guidance for AUM growth, ROA, and ROE, emphasizing a conservative yet growth-oriented approach.

Highlights

  • Operating income grew 96% YoY to INR 334 crores for FY26.

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

  • Profit after tax for FY26 increased 58% YoY to INR 128 crores.

  • Q4 PAT showed strong sequential growth of 30% QoQ, reaching INR 42 crores.

  • The company successfully maintained nil NPAs, attributing it to its supply chain finance model and robust early warning systems.

  • Gross disbursements for FY26 crossed INR 25,000 crores, demonstrating strong digital and invoice financing capabilities.

Key financials

3 periods

Headline

  • Operating Income
    ₹334 Cr
    YoY +96%
  • Loan Book
    ₹3,936 Cr
    YoY +75%
  • Factoring Book Outstanding
    ₹175 Cr
  • Equity
    ₹1,481 Cr
  • Leverage
    1.9×
  • Provision
    ₹18 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%
  • Average AUM
    ₹2,640 Cr
    YoY +106%

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 enough bank lines available, more than INR 3,000 crores (up to INR 3,500 crores), which are not fully utilized, providing space to utilize further. Current leverage is 1.9x, with an acceptable range for NBFC business being 3x to 4x, providing significant headroom for growth without fresh equity. With current capital and bank limits, the company can reach an AUM of INR 6,000 to INR 7,000 crores easily, and an internal target of INR 10,000 crores AUM in three to four years without fresh equity.
    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. ... Right. In fact, it is more than INR 3,000. 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. ... 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? ... 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.

Guidance & targets

AUM

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

    — Vinay Gupta

Profitability

  • ROA Profitability · ongoing · High confidence 4.5-5%
    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 · full financial year · High confidence 30-35%
    Future PAT guidance is on the PAT of previous financial year and not on exit run rate of Q4.

    — 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.

    — Vinay Gupta

Capital Structure

  • Leverage Capital Structure · 2-3 years · Medium confidence 3x

    From 1.9x today

    Number two, on the equity side, currently we are at around 2x leverage. 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

What to watch in Q1 FY27

AUM Growth (FY27)

FY27
Current 106% YoY for FY26 (average AUM)
Target 35-40%

Why it matters

Verifies the company's ability to accelerate AUM growth as guided for the next fiscal year.

Our aspiration on the AUM for FY '27 is around 35%-40% growth.

Risks & concerns

  • Potential stress due to ongoing geopolitical issues

    medium

    Management is monitoring the geopolitical situation for potential indirect impacts, especially on steel imports/domestic manufacturers, but currently sees no direct stress.

    Management acknowledged

Q&A highlights

8 direct
Competitive advantage and nil NPA sustainability 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.

Explains the fundamental business model that allows for nil NPAs, crucial for investor understanding of risk management.

Asked by Abhi Jain

Early warning signal system Direct
Wherever we see this space is getting elongated, the dealer or the borrower is not able to churn it in a better manner, then that creates an early warning for us.

Details the proactive risk management system, reinforcing confidence in NPA control.

Asked by Abhi Jain

Scalability with Grade A anchors Direct
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...

Addresses concerns about market saturation and growth potential, indicating significant untapped market.

Asked by Abhi Jain

AUM funding and leverage Direct
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.

Clarifies the company's capital structure and its ability to fund significant AUM growth without immediate equity dilution.

Asked by Kushal Jajodia

ROA, debt-to-equity, and TREDS platform Direct
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. ... 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.

Provides insight into profitability targets, capital structure strategy, and progress on new business initiatives like TREDS.

Asked by Parin Gala

Jump in fee income for Q4 Direct
In Q3, we could have generated more than we had. As a business strategy, we have started focusing on fee income, and if there is a potential to generate fee, we will not leave it on table?

Explains the significant increase in fee income, indicating a strategic shift to monetize services more effectively.

Asked by Rajat

Management's conservative guidance Direct
Yes, you are right on your observation. We were conservative last quarter because there was a reason. There was a change in management and we wanted to go a little slow, we wanted to consolidate ourselves and see in which direction we want to grow.

Acknowledges and explains the rationale behind the conservative guidance, providing context for future performance expectations.

Asked by Manish

Impact of geopolitical situation on top sectors Direct
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.

Addresses a potential external risk, showing management's awareness and proactive monitoring.

Asked by Akhilesh Kumar

3 min read 6 chapters

Detailed narrative

Strong Financial Performance in Q4 and FY26

SG Finserve Limited delivered an excellent performance in Q4 FY26 and for the full fiscal year. Operating income for FY26 grew 96% year-on-year to INR 334 crores, while the Loan Book achieved an all-time high of INR 3,936 crores, marking a 75% year-on-year growth. Profit after tax for FY26 was INR 128 crores, a 58% increase year-on-year, with Q4 PAT alone reaching INR 42 crores, reflecting a 30% sequential growth. Gross disbursements for the full year surpassed INR 25,000 crores, showcasing the company's digital and invoice financing capabilities.

Robust Supply Chain Finance Model and Nil NPAs

The company's core business, supply chain finance, is characterized by a tripartite relationship involving the anchor, borrower, and financer, which inherently minimizes credit risk. This model, coupled with a robust early warning system, has enabled SG Finserve to maintain nil NPAs. The early warning system monitors the churning cycle of dealers, identifying potential challenges early and collaborating with anchors to ensure timely repayments, thereby preventing accounts from deteriorating.

Significant Headroom for Growth and Scalability

Management emphasized the vast scalability within the supply chain finance space, noting that less than 100 out of the top 500 corporates are active in this segment, and even for active anchors, only 25-30% of their sales are covered by organized supply chain programs. The company currently operates with a leverage of 1.9x against an acceptable NBFC range of 3x-4x, providing substantial headroom. With existing capital and bank lines exceeding INR 3,000 crores, the company believes it can comfortably reach an AUM of INR 6,000-7,000 crores without additional capital, targeting INR 10,000 crores AUM in 3-4 years.

Strategic Focus on Fee Income and TREDS Expansion

SG Finserve reported a significant jump in fee income to INR 6.23 crores in Q4 FY26, up from INR 1.5-1.89 crores in prior quarters. This increase is attributed to a strategic focus on monetizing services and not leaving potential fees on the table. Additionally, the company has commercialized bilateral factoring with INR 175 crores outstanding as of March 31, and has onboarded two TReDS platforms (RXIL and M1xchange), with plans to go live in Q1 FY27, further expanding its factoring business.

Conservative Guidance with Strong Future Outlook

The company provided a medium to long-term AUM growth guidance of 25-30%, with an aspiration for 35-40% growth in FY27. Profitability targets include an ROA of 4.5-5%, an ROE of 14-16%, and a Cost to Income ratio between 13-17%. Management reiterated its commitment to maintaining nil NPAs as a core philosophy. The guidance, though conservative, reflects a cautious approach following a change in management, aiming for consistent over-delivery.

Industry Focus and Geographical Presence

SG Finserve primarily focuses on industries suitable for supply chain finance, such as auto, steel, construction, white goods, and IT peripherals, with construction being the largest sector (around 35% of AUM) and automotive being the second. The company currently caters to 30 hub locations across India, covering approximately a 100-kilometer radius from each hub, indicating a fairly widespread presence. The business is 100% domestic, with no direct exposure to import-export financing.

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