SBFC Finance Q2 Results, October 24, 2026: Profit Up 27% to ₹139 Crore on Steady MSME Lending

The SBFC Finance Q2 results landed on Saturday, October 24, and the headline is tidy: net profit for the July-September quarter rose 27.2% year on year to ₹138.9 crore, from ₹109.1 crore a year earlier, according to the unaudited results filed with NSE. Against the June quarter’s ₹130.1 crore, profit was up 6.7%. The Mumbai-based lender, which gives secured loans to small businesses, now has a loan book that has grown by more than a quarter in a year.

SBFC Finance Q2 results: the numbers that matter

Total income for the quarter came to ₹546.7 crore, 33% higher than the ₹411.0 crore of the same quarter last year. Assets under management (AUM) stood at ₹12,592 crore at the end of September, up 27% year on year and 6% over June, as per the company’s Q2 FY27 investor presentation. For the first half, profit came in at ₹269.0 crore against ₹210.0 crore, a 28.1% rise.

• Secured MSME disbursements: ₹855 crore in the quarter.
• Spread: 9.6%, up from 9.1% a year ago, helped by borrowing costs falling to 8.4% from 9.0%.
• Net interest margin on average AUM: 10.5%, the same as a year ago and slightly lower than 10.7% in the June quarter.
• Return on average tangible equity: 15.0%, against 14.1% a year earlier.
• Branches: 257, across 18 states and 2 union territories.

Asset quality is steady, with one number to watch

Gross NPA (stage 3 loans) eased to 2.6% from 2.8% a year ago, and net NPA was 1.5%, the same as a year ago. That reads well. But provision coverage on those bad loans has slipped to 42.2% from 46.2% in September 2025, and the share of secured MSME loans that are even one day overdue was 9.2%, the same as in June but higher than 8.7% a year ago. Credit cost for the quarter was ₹41 crore, compared with ₹31 crore a year earlier and ₹42 crore in the June quarter.

For a lender whose typical customer is a small business owner borrowing ₹5 lakh to ₹30 lakh, that early-stage overdue number is the one we would keep an eye on over the next two quarters. It hasn’t turned into NPAs yet.

Why finance costs grew faster than the loan book

Here’s the odd bit. Finance costs jumped to ₹196.0 crore from ₹129.0 crore a year ago, a 52% increase, and were 28.5% higher than June’s ₹152.5 crore. Interest income on loans, by contrast, grew 29.3% year on year. The average cost of borrowing actually fell, so the jump comes from a bigger pile of borrowed money rather than costlier money. The balance sheet showed ₹1,455 crore in cash and bank balances at the end of September, and interest income other than on loans rose to ₹28 crore from ₹6 crore in the June quarter. In plain terms, SBFC is carrying more liquidity than it has lent out yet. That isn’t a problem by itself, but idle cash earns less than MSME loans, so it pulls on returns until it is deployed.

Capital is not a constraint. The company reported a capital adequacy ratio of 31.3% and tangible net worth of ₹3,789 crore.

What it means for investors

This is a clean quarter for SBFC: profit growth roughly in line with loan growth, lower operating costs (opex to average AUM fell to 4.1% from 4.4%) and a better spread. The questions for the earnings call, scheduled for Monday, October 26 at 9:30 AM IST, are how quickly the extra cash gets lent out and whether the rise in early overdues settles. If you’re new to reading lender results, our guide on how to analyse quarterly results of a company walks through these ratios, and our Shriram Finance Q2 results coverage gives a bigger NBFC to compare against.

Sources: SBFC Finance unaudited financial results for the quarter ended September 30, 2026 (NSE filing); SBFC Finance Q2 FY27 investor presentation (NSE filing). Rupee figures from the results statement are converted from ₹ million to ₹ crore and rounded.

Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making any investment decision.