SBFC Finance Q2 FY27: PAT +27% YoY to ₹139 Cr beats estimates as margins compress

SBFC Finance's standalone PAT rose 27.3% YoY (+6.7% QoQ) to ₹138.87 Cr on revenue from operations of ₹546.39 Cr, up 33.0% YoY (+11.2% QoQ) — both ahead of our pre-result preview's expected ₹120–130 Cr PAT and ₹480–495 Cr revenue bands, and consistent with the Street's pre-print Strong Buy consensus (avg target ₹120.71, seven analysts). There are no exceptional items in the quarter, so the reported and underlying growth rates are the same. The quarter was a growth-over-margin print. Net profit margin compressed to 25.40% from 26.55% a year ago and 26.47% last quarter, even as the opex ratio improved — employee, depreciation and other expenses together annualise to roughly 3.9% of an estimated ₹12,558 Cr AUM, inside management's 4%-by-year-end opex target. The squeeze instead came from funding cost: finance costs jumped 52.0% YoY (28.5% QoQ) to ₹195.97 Cr as the debt-equity ratio widened to 2.31x from 1.80x a year ago, growing faster than the 33% revenue increase. Credit cost (impairment charge of ₹41.44 Cr, annualising to ~1.49% of the on-book loan book) sits at the top edge of management's guided 1.4–1.5% range — on-plan, not a miss, and asset quality actually improved, with GNPA at 2.64% versus 2.66% QoQ and 2.77% a year ago, NNPA flat at 1.54%, and provision coverage at 42.24%. On-book loans grew to ₹11,161 Cr (+13.8% over H1FY27); adding the non-SBFC share of co-lending exposure (₹1,397 Cr) puts managed AUM at roughly ₹12,558 Cr — up from ₹11,922 Cr in Q1 FY27 and tracking inside the previewed ₹12,500–12,800 Cr band and management's 5–7% quarterly AUM growth guidance, en route to the company's ₹15K Cr target. The quarter's other disclosed development, a ₹100 Cr NCD allotment on September 18, lines up with the cash-flow statement showing ₹250 Cr of fresh debt securities issued against ₹150 Cr repaid — consistent with debt-funded balance-sheet growth rather than a one-off. No standalone management press release or MD commentary was available in this context beyond the results themselves (signed off by MD & CEO Mahesh Dayani); this result confirms, rather than contradicts, the cautious-on-cost, optimistic-on-growth tone from the prior concall — growth outran guidance while the margin give-back was flagged by rising leverage, not a surprise.