SBFC Finance (SBFC)

FairStock Score: 65/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Revenue growth of 29.59% and profit growth of 30.31% show strong compounding momentum
• Latest quarter net profit of ₹118 Cr on sales of ₹426 Cr implies a healthy profit margin
• Piotroski F-Score of 7/9 suggests sound earnings quality and improving fundamentals
• Promoter holding of 52.82% aligns management with minority shareholders
• PEG ratio of 0.65 indicates the growth may not yet be fully overpriced if sustained

Concerns

• Negative free cash flow of ₹1,240 Cr despite reported profitability is a red flag for cash conversion
• Price of ₹95.99 is well above Graham Number of ₹53.18, leaving a negative margin of safety of 75%
• EV/EBITDA of 444.32 and Altman Z-Score of 1.69 point to expensive valuation and financial stress signals
• Zero dividend yield means investors rely solely on uncertain capital appreciation

AI Analysis

Let me look at SBFC as a business first, not as a ticker. The top line grew 29.59% and profit grew 30.31%, with the latest quarter showing ₹426 Cr of sales and ₹118 Cr of net profit. That is a strong profit margin and the kind of compounding that attracts my attention. Promoter holding of 52.82% is a good sign; it aligns owners with minority investors. A Piotroski score of 7/9 also suggests the fundamentals are solid, not dependent on clever accounting. However, I do not see a wide economic moat here. An NBFC lending to small businesses competes on underwriting, distribution, and cost of funds; those edges can fade quickly. ROE is 13.24% and ROCE is 11.55%, decent but not exceptional. The market is paying ₹95.99 against book value of ₹28.83, which is 3.33 times book for a 13% ROE. The Graham Number is ₹53.18, so the current price carries a negative margin of safety of about 75%. The P/E of 24.38 is not unreasonable if growth continues, and the PEG of 0.65 suggests the growth is still fairly priced, but Graham would remind us that price is what you pay, value is what you get. I am troubled by negative free cash flow of ₹1,240 Cr and an EV/EBITDA of 444.32, which signals how expensive the enterprise has become relative to cash earnings. The Altman Z-Score of 1.69 is also in the caution zone, while debt-to-equity of 1.65, normal for a lender, still needs careful tracking. There is no dividend, so the investor is entirely dependent on capital gains. This is a fast grower, not a stalwart yet. I would want a more reasonable price before committing serious capital.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer