The street is not happy with SBFC Finance despite a strong Q3; Stock back at listing price

Shares of SBFC Finance Ltd. are down as much as 12% on Tuesday, January 27, despite a strong December quarter earnings performance. This is the biggest single-day drop that the stock has seen since its listing back in August 2023.

The company’s top management rejig is something that is weighing on sentiment. Aseem Dhru, the current MD & CEO, will now be elevated as non-executive Vice Chairman from April 1, 2026.

Instead, Mahesh Dayani, will be elevated from Executive Director to the new MD & CEO. Dayani has been a founding member of SBFC Finance.

On the earnings front, the company reported a strong quarter with a 34% growth in its net profit to ₹118 crore from ₹88 crore during the same quarter last year.

Assets Under Management (AUM) at the end of the quarter grew by 29% from last year to ₹10,478 crore from ₹8,148 crore earlier.

Operating expenses as a percentage of its AUM also fell to 3.93% from 4.4% in the previous quarter, while credit costs remained stable on a sequential basis.

A combination of lower opex and stable credit costs meant that the company’s Return on Assets (RoA) grew to 4.67% from 4.56% sequentially.

Shares of SBFC Finance are trading 11.6% lower on Tuesday at ₹90. The stock had listed in August 2023 at a price of ₹82 per share, well above the issue price of ₹57 apiece. The stock is declining from its recent 52-week high of ₹123.