Powerful listing of SBFC Finance in NSE has delivered a 44% premium to its allottees. Retail investors find themselves confused over whether to invest in SBFC Finance’s stocks, uncertain about its future trajectory. Predicting the company’s share price target remains a challenge due to several variables influencing the financial markets.
Should we enter right now or wait for the share price to correct are a few questions that are boggling the minds of retail investors.
With our scientific approach lets calculate what will be the future share prices of SBFC Finance. Although the information about the financials of SBFC Finance limited we will be using a comparative apparoach where we will be comapring and using data of its competitors like LIC Housing Finance, AAVAS, HUDCO etc. to calculate the share price targets.
Introduction
SBFC Finance is a non-banking financial company (NBFC) that provides loans to micro, small and medium-sized enterprises (MSMEs) in India. The company was founded in 2008 with its headquarters in Mumbai, Maharashtra.
- Pan-India presence with branches in over 200 cities.
- The company offers a variety of loan products to MSMEs, including working capital loans, term loans, and loans against gold. SBFC Finance also offers loan management services to other financial institutions.
- SBFC Finance’s business model is based on a “PhyGital” approach, which combines digital technology with personal relationships.
- Its parent company is SBFC Holdings Pte Ltd, which is a Singapore-based investment company.
- Total loan portfolio: ₹7,500 crore (as of March 2023)
- Number of customers: Over 100,000
- Over 200 branches
- Digital platform: SBFC Finance has a digital platform that allows customers to apply for loans, track their loan status, and make payments online.
SBFC Finance Share Price
Financials
- Small Cap company with market cap of Rs. 9800 Cr.
- Stock PE 65.3 which means a bit overvalued.
- ROCE and ROE good around 10.
- Sales CAGR 44% since 2019.
- Profit growth 132% YoY.
- High OPM more than 60%.
- Reserves grown 1.5X from past year.
- Loan Book of 3739 Cr. which is good.
Calculating Share Price Targets
Looking at the speed of its growth, Lets calculate the future sales of the company. Thesre future sales will help us claulate the Net Profits. Assuming various PE that could be given by the market, we could finally calculate the future share prices of the company.
Assumptions
- Sales Growth 40% – The Company has shown a CAGR growth of 44% since 2019. Since it is a growing company with largest AUM growth from 2019-2023, according to our analysts it can grow by 40% in coming years.
- PAT Margins 25% – The PAT margins of these kind of companies grow every year with growth in sales. NBFC companies usually have high PAT margins and Operating margins. Currently SBFC Finance have PAT margins of 20% but lets assume it will maintain its margins to 25% for next 5-7 years.
- PE Base Case 40 – SBFC Finance is currently trading at a PE of more than 60 which seems quite high for a NBFC. According to our analysts, PE of 40 seems fair. PE may go up and down, for that we have bear and bull case scenario.
- PE Bear Case 30
- PE Bull Case 50
SBFC Finance Projected Sales and Projected Net Profits
If sales of SBFC Finance keep growing by 40% and if it kept making profits by 25% , following future sales and future profits SBFC Finance would be making from 2024 to 2030.
| Year | Projected Sales ( In Cr.) | Projected Net Profit ( In Cr.) |
| 2023 | 734 | 147 |
| 2024 | 1028 | 257 |
| 2025 | 1439 | 360 |
| 2026 | 2014 | 504 |
| 2027 | 2820 | 705 |
| 2028 | 3948 | 987 |
| 2029 | 5527 | 1382 |
| 2030 | 7737 | 1934 |
SBFC Finance Share Price Target
We have calculated the profits company can make in the future, now its turn of share price targets.
Share Prices of a company depends on market sentiments therefore they go up and down. Assuming PEs in all Base case (ideal), Bear Case (when market has negative sentiments about SBFC Finance), and Bull Case (when market is positive) we can calculate a range in which share prices can move in a particular year.
Traders and retailers can use this range as a reference when to enter and exit from this stock.
For example :- in a particular year if the stock is trading near or below the bear case price, then the stock is undervalued and it is a good point to enter.
If the stock is trading near or above bull case price so its time to exit if you have already bought and stay away if you want to do a fresh investment.
| Year | Share Price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2023 | 42 | 55 | 69 |
| 2024 | 73 | 97 | 121 |
| 2025 | 102 | 136 | 170 |
| 2026 | 143 | 190 | 238 |
| 2027 | 200 | 266 | 333 |
| 2028 | 279 | 372 | 466 |
| 2029 | 391 | 521 | 652 |
| 2030 | 547 | 730 | 912 |
SBFC Finance Share Price Target 2023
| Year | Share Price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2023 | 42 | 55 | 69 |
According to our analysts fair price of of SBFC Finance should be around 55 but it is currently trading at 90 levels. These levels have benefitted its allotees but it is overvalued for new entrants. New traders should wait for some correction.
This overvaluation may be because of growing demand of MSME’s in India. The government is also initiating to promote the growth of MSMEs.
Read More: Hardwyn India Ltd. Share Price Prediction
SBFC Finance Share Price Target 2024
| Year | Share Price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2024 | 73 | 97 | 121 |
By 2024, the sales and loan book, both will grow substantially and thereby increasing the Profits for the company. The company has already got positive response from the public which may continue further with good financial results.
The company is also investing a lot on technology to improve its credit underwriting and risk management capabilities.
It is also expanding its digital platform to make it easier for customers to apply for loans, track their loan status, and make payments online. Penetration of digital technology in the financial sector is also increasing.
SBFC Finance Share Price Target 2025
| Year | Share Price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2025 | 102 | 136 | 170 |
Currently the company has 200 branches to which it plans to expand to 300 by 2025. This would help the company to create more reach and hence enhancing revenue.
The company also plans to increase its loan portfolio to ₹10,000 crore by 2025. Bigger loan book always brings in more interest foe NBFC’s. Bigger the loan book, better it is.
Share Price may vary from 102 to 170 in 2025. Entering at the levels of 100 and exiting at 170 can give a 70% potential gain.
SBFC Finance Share Price Target 2030
| Year | Share Price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2030 | 547 | 730 | 912 |
SBFC Finance plans to introduce new loan products and services, such as invoice discounting and trade finance. It also wants to expand its foot prints in new markets, such as Southeast Asia and Africa.
New services and expansion in in countries of SE Asia and Africa will further boost its growth. Both SE Asia and Africa are undeveloped or developing countries where MSME’s have huge potential.
If kept for a long time and if company could do what it promises, SBFC Finance can turn into a multibagger for its investors.
Conclusion
SBFC Finance has a bright future and it may go up. It is well placed for future growth. Reason according to our analysts are:-
- They use both technology and personal connections to really understand what customers need and offer the right financial services.
- In the past five years, their money-making ability has grown a lot, about 35% every year.
- They have clear plans to expand their places, offer more types of loans, and give more services.
- Lots of small businesses in India need financial help, and SBFC Finance is in a good position to give them what they need. This is important because these small businesses help the country’s economy grow, and the demand for financial help for them is going up.
FAQ
Who is the Promoters of SBFC Finance?
The promoters of SBFC Finance are:
SBFC Holdings Pte Ltd, a Singapore-based investment company – 22.9%
Clermont Financial Pte Ltd, a Singapore-based investment company – 13.4%
Arpwood Partners Investment Advisors LLP, an Indian investment advisory firm – 8.2%
Arpwood Capital Private Limited, an Indian investment firm.
Eight45 Services LLP, an Indian investment firm.
The promoters hold a combined stake of 49.7% in SBFC Finance.
Read More : Balaji Amines Share Price Target
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Disclaimer- All investments and trading in the stock market involve risk. Any decision to place a trade in the financial markets, including trading in stock should only be made after thorough research. Trading strategies or related information mentioned in the article is for informational purposes only. Use your due diligence before investing. These are just predictions. They may or may not be true. We are not SEBI-registered analysts.