SG Finserve Limited: Navigating Growth and Change in Q2 FY26

SG Finserve Limited, a prominent Non-Banking Financial Company (NBFC) specializing in MSME supply chain financing, recently shared its financial results for the quarter and half year ended September 30, 2025 (Q2 FY26). The company reported robust growth in its loan book and profitability, even as it navigates a dynamic economic landscape and significant leadership transitions. These results highlight SG Finserve's commitment to expanding its digital outreach and strengthening its position in the Indian financial ecosystem.

For Q2 FY26, SG Finserve's loan book grew by an impressive 15% quarter-on-quarter, reaching INR 2,878 crore. This growth translated into a 16% increase in Profit After Tax (PAT) to INR 28.40 crore for the quarter. On a half-yearly basis (H1 FY26), the company's operating income surged by 91% to INR 142.31 crore, and PAT grew by 58% to INR 52.92 crore compared to H1 FY25. Despite these strong figures, management revised its full-year PAT guidance for FY26 downwards to INR 120-125 crore from an earlier projection of INR 150-160 crore, citing a slowing macro environment. This cautious approach underscores the company's focus on maintaining asset quality amidst external pressures.

Financial Highlights: Q2 FY26 vs Q1 FY26

Strategic Initiatives and Digital Transformation

SG Finserve's strategy revolves around leveraging technology and strategic partnerships to drive inclusive financial solutions. The company operates a 100% digital platform for credit scoring, loan documentation, and automated disbursement of invoices, ensuring seamless operations. This digital backbone supports its core offerings of vendor, dealer, and supply chain financing, primarily serving MSMEs.

Key initiatives include the ongoing development of an AI-driven Monitoring Tool, expected to be live by December 2025, which will streamline loan monitoring and assess borrowers' financial performance. Additionally, the launch of a 'Customer Mobile App (Android)' aims to enhance client convenience by providing real-time access to loan information and transaction history. These technological advancements are crucial for scaling operations and maintaining efficiency.

The company has also secured additional equity commitments of INR 450 crore through share warrants, with INR 338 crore expected by April 2026, further strengthening its capital base. This capital, combined with plans to raise banking limits aggregating to INR 4,500 crore for FY27, positions SG Finserve for aggressive yet disciplined growth.

Management Transitions and Future Outlook

The quarter also saw significant leadership changes, with the CEO, CFO/COO, and Company Secretary roles undergoing transitions. Sorabh Dhawan, the outgoing CEO, and Sahil Sikka, the outgoing CFO/COO, have moved on to new opportunities. Vinay Gupta has been appointed as the new CEO, bringing over two decades of banking and supply chain finance experience, while Sanjay Rajput, previously Head of Finance and Accounts, has been elevated to CFO. Management emphasized that these transitions are being managed smoothly, with a focus on business continuity and leveraging the collective experience of the leadership team and board.

Looking ahead, SG Finserve aims for a loan book of INR 3,500 crore by FY26 and a substantial INR 6,000 crore by FY27. The company also projects its cost-to-income ratio to decline from 70 basis points to 55 basis points over the next two financial years, driven by digital efficiencies. Furthermore, it plans to expand into retailer financing, moving one tier below its current distributor-focused model, which is expected to boost Net Interest Margins (NIMs) by 50-150 basis points. The long-term vision includes achieving an ROE of 15% as a first milestone, eventually targeting 18-19%.

Conclusion: Strategic Clarity Amidst Evolution

SG Finserve Limited's Q2 FY26 results demonstrate a company in a phase of strategic evolution. While navigating leadership changes and a cautious macro outlook, its core business model, anchored by a zero NPA track record and strong digital capabilities, continues to deliver growth. The company's clear roadmap for capital infusion, technological enhancements, and market expansion signals a confident stride towards its long-term objectives, reinforcing its commitment to financial inclusion and robust supply chain financing in India.