SBFCNSE29 August 2023

Sbfc Finance Limited has informed the Exchange about Investor Presentation

SBFC Finance Limited

August 29, 2023

To National Stock Exchange of India Limited, Exchange Plaza, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400051 NSE Symbol: SBFC

To BSE Limited Phiroze Jeejeebhoy Towers, 21st Floor, Dalal Street, Mumbai – 400001 BSE Scrip Code: 543959

Dear Sir/ Madam,

Sub: Investors Presentation

Further to our letter dated August 24, 2023 intimating about Earnings Conference Call, please find attached the investor presentation which will be referred during the earnings call with investors in connection with the financial results for the quarter ended June 30, 2023.

We request you to take this on record.

For SBFC Finance Limited (Erstwhile SBFC Finance Private Limited)

Jay Mistry Company Secretary & Chief Compliance Officer ICSI membership no – A34264

SBFC Finance Limited (Erstwhile SBFC Finance Private Limited) Registered Office: Unit No. 103, 1st Floor, C&B Square, Sangam Complex, Andheri Kurla Road, Village Chakala, Andheri (East) Mumbai - 400 059 T. : +91-22-67875300 • F : +91-22-67875334 • www.SBFC.com CIN: U67190MH2008PLC178270

Investor Presentation Q1 FY 2024

Safe Harbor

This presentation and the accompanying slides (‘Presentation”), which have been prepared by SBFC Finance Limited (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.

Forward looking statements concerning the Company's future business prospects and business profitability are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The Company does not undertake to make any announcement in case any of the forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the Company.

SBFC – At a glance

Size and Growth

Distribution

Granular Book

Asset Quality

Liability Profile

Profitability

5,327 AUM

YoY 47% | QoQ 8%

4,328 Secured MSME AUM

YoY 61% | QoQ 10%

655 Secured MSME Disbursal Value

YoY 32% | QoQ 4%

162 # Branches

3,136 Employees

97.4% % Secured

9.84* | 0.85* Average Ticket Size: Secured MSME / LAG (Lakhs)*

2.54% GNPA

1.55% NNPA

1,666 Tangible Net worth

47 Q1 FY24 PAT

CRAR 33.6% Capital Adequacy

3.72% Return on AAUM

16 States & 2 UTs Pan India presence

1,06,752 # live customers

0.80% Credit Cost

23 Lender Relationship Count

6,655 Secured MSME Disbursal Volume

YoY 31% | QoQ 7%

100% in-house Sourcing

LTV 42.4% / 67.8% Secured MSME / LAG

39.56% PCR

A+ (Stable) Credit rating1

Note: All values in INR (Cr) unless stated otherwise, All metrics as of June 30, 2023/ Q1FY24 unless stated otherwise; 1Long term credit rating by ICRA , India Ratings and CARE Ratings

16.56% Q1 FY24 Yield

7.09% Spread

About the company Management and Shareholder Business Credit & Risk Financials ESG

162 branches 120 Cities 16 States 2 UTs

Executive Summary

RBI registered, systemically important, non-deposit taking non-banking finance company (“NBFC-ND-SI”)

Team: Experienced, cycle-tested, professional management with strong corporate governance backed by marquee investors

Focused Segment: Offering Secured MSME loan to small businesses with focus on ₹5 lakh - ₹30 lakh ticket size

Opportunity: Market size (₹5 lakh - ₹30 lakh MSME financing) of ₹2.5 lakh crore, growing at 24%1

Go to Market Approach: Diversified pan-India network with presence in 16 states & 2 UTs: top state at 17.4% AUM

Credit Underwriting: Understanding of segment with a tested credit underwriting and risk management framework

1CRISIL Industry Report

5 5

SBFC Focus Segment – customers borrowing ₹0.05 to ₹0.3 cr Large segment within MSME of ₹2.5 lakh cr and growing at CAGR 24%

Segment

Market Size1 (₹ tn)

CAGR2 (%)

% of Market

>₹1 cr

₹0.5 – 1 cr

₹0.3 – 0.5 cr

₹0.05– 0.3 cr

<₹0.05 cr

Total

Source: CRISIL Industry Report; 1 As of Mar-23; 2 CAGR period over FY18 to FY23

3.6

1.1

0.9

2.5

0.5

8.5

13.1%

17.0%

20.4%

23.7%

29.3%

17.7%

42%

13%

10%

30%

100%

Focus Segment

Our Journey

AUM of INR 1000cr

100 Branches

Investment by Clermont and Arpwood group

50,000 customers

3192

2221

1648

778

1156

1,00,000 customers 150 Branches 150 cr PAT Credit rating upgraded to ‘A +’

5327

4943

2018

2019

2020

2021

2022

2023

2024 (Q1)

All figures in Rs. crore.

AUM

About the company Management and Shareholder Business Credit & Risk Financials ESG

Management Experienced, cycle-tested, professional management

Aseem Dhru

Mahesh Dayani

Narayan Barasia

Pankaj Poddar

MD & CEO

Chief Business Officer

Chief Financial Officer

Chief Risk Officer

Sanket Agrawal

Sumeet Ghai

Ganesh Vaidya

VM Maneesh

Sai Prashant Menon

Chief Strategy Officer

Chief Human Resource Officer

Chief Technology Officer

Chief Operating Officer

Chief Collection Officer

Board of Directors Strong corporate governance backed by long term investors

Rajesh Agrawal Jt. Managing Director, Ajanta Pharma

Surekha Marandi Ex Executive Director, RBI

Jonathan Tatur Investments Clermont Group

Arjun Sakhuja Investments Clermont Group

Independent

Neeraj Swaroop SGX Ex-CEO Standard Chartered

John Mescall Managing Director Clermont Group

Amol Jain Co-founder Arpwood Partners

Managing Director

Aseem Dhru MD & CEO

Shareholding

Category of Shareholders

Promoters

Clermont Group

Arpwood Group

Other Major Shareholders

SBI Mutual Fund

Amansa

Malabar Funds

Steadview Capital

Massachusetts Institute of Technology

% Share

58.52%

5.50%

7.32%

4.16%

1.88%

1.48%

Shareholding Pattern

2.61%

10.61%

10.25%

12.51%

64.02%

Promoters

Mutual Funds, AIF, Insurance, Banks

Foreign Portfolio Investors

Individuals, Bodies Corporate

Foreign Companies

# Status as on August, 25 2023

About the company Management and Shareholder Business Credit & Risk Financials ESG

Executive Summary - Q1 FY24

Asset Under Management

Disbursement1

5327

655

Branches

162

47%

32%

+27

+10

Gross NPA

2.54%

Yield

16.56%

Opex

5.42%

-32bps

-3bps

+83bps

+5bps

-67bps

-17bps

PAT

RoAAUM

3.7%

RoATE

12.0%

46%

10%

-11bps

+2bps

+156bps

+15bps

1Secured MSME All figures are in ₹cr

YoY

QoQ

Business Momentum Delivering rapid growth in recent years

CAGR: 49%

3192

20%

73%

4943

18%

79%

10%

2221

25%

65%

Simplify graphic

YoY : 47%

QoQ : 8%

5327

16%

81%

4943

18%

79%

3628

20%

74%

Mar-21

Secured MSME

Mar-22

LAG

Mar-23 Others

Q1 FY 23 Mar-21

Q4 FY 23 Mar-22

Secured MSME

LAG

Q1 FY 24 Mar-23

Others

All figures in Rs. crores.

AUM

Business Momentum – Secured MSME Growth in both Volume & Value

AUM

YoY: 61%

3920

QoQ: 10%

4328

Disbursement Value

Disbursement Volume

YoY: 32%

632

QoQ: 4%

655

YoY: 31%

6230

QoQ: 7%

6655

496

5076

2695

Q1 FY 22-23 Q1 FY 23

Q4 FY 22-23 Q4 FY 23

Q1 FY 23-24 Q1 FY 24

Q1 FY 23

Q4 FY 23

Q1 FY 24

Q1 FY 23

Q4 FY 23

Q1 FY 24

AUM Secured MSME All figures in ₹cr

Business Momentum Co-origination – Validates our profitable origination

Steady rise in co-origination disbursement…

…leading to rise in co-origination AUM over the years

17%

22%

18%

10%

16%

Co-origination Disbursement (₹crs)

Co-origination AUM (₹ crs)

137

116

613

699

276

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

1Percentage is on Total Secured MSME Loans

Business Momentum No concentration risk & well distributed growth

Present in 16 states, 2 UTs covering 120 cities via 162 branches

Driven by steady rise in AUM per branch

9 6

Branch Mix

20 6

19.8%

9.8%

₹5327 AUM Mix

31.6%

38.8%

South

East

North West

East South

North West

# Branches

162

<12 months

>12 & <36 months

>36 months

45 40 35 30 25 20 15 10 5 0

FY 22-23 Q1 Q1 FY23

FY 22-23 Q4 Q4 FY23

FY 23-24 Q1 Q1 FY24

Vinatage =<12M All figures in Rs. Cr.

12M<Vintage<36M

Vintage>=36M

About the company Management and Shareholder Business Credit & Risk Financials ESG

Credit Underwriting Tailored to service underserved, underbanked informal customers

Most small businesses in India have challenges

Partial Income Proof

Limited Commercial Credit History

Collateral with local nuances

•

• •

SBFC's business model, backed by experience in this segment

Credit officer spends time to understand income & cash flow (documented + non-documented) at family level Evaluation of historical asset creation

SBFC customers are often first-time commercial borrowers with past consumer loans Reference check from the neighbourhood, locality and their customer and suppliers

Local team with knowledge of local nuances and local collateral dynamics Spouse or parent act as co-borrower on all loans

Bank Statements with Limited Transactions

• Analytics driven ‘customer segmentation’ •

Triangulation of income sources from multiple data points

Small scale businesses lack resilience

• •

Focus on services/ trading/ retailing businesses Customer with businesses in essential services - less impacted by macro down-cycles

Deep understanding of customer behavior (over 51K MSME customers) & strong knowledge of local markets (16 states, 2 UTs)

Credit Underwriting Robust end-to-end credit process

Rework graphic

Rework icons

Sourcing

Appraisal

Credit

Disbursement

Account Management

100% in house loan sourcing

KYC Verification & DeDupe

Personal Discussion

Sanction Letter

CIBIL Check (failure → rejection)

Analysis of Financials, Banking, Repayment Track Record

Property Visit

Loan details captured

NACH, PDC & EMI Presentation

Collections & Bounce tracking

Capture details of customer, business and collateral

CAM Preparation

Legal & Valuation

Property document filing & charge creation

Legal

s p e t S y e K

RCU Checks, Collateral dedupe, RV, OV, BV, ITR, Reference checks

Case Proposal

CERSAI & CIBIL update

Customer Service

Note: RCU: Risk Control Unit, ITR: Income Tax Return:, RV: Residence Verification, OV: Office Verification, BV: Bank Verification

Credit Underwriting Quality borrowers with credit score above 700

Over 83% AUM from customers with CIBIL >7001,2

Granular loan book with high quality collateral1

0/-1

<650

8.0%

6.8%

9.9%

> 650 & < 700

7.4% 4.3% 8.5%

7.9% 2.1% 7.7%

7.8% 1.8% 7.5%

94.01% AUM secured by self occupied residential/ commercial property

42.39% LTV

100% co-borrower Spouse, parent acting as one

90.4% women Borrowers/ co-borrowers

No industry >10% Sector exposure not more than 10% of our loan portfolio

75.3%

79.8%

82.3%

82.9%

> 7002

CIBIL Score

Mar'21

Mar'22

Mar'23

Jun'23

1Pertains to secured MSME Loans; 2>700 range is combination of 700 -750 & >750 numbers

Credit Indicators

Gross NPA % 1

2.87%

Net NPA % 2

1.78%

2.57%

2.54%

PCR 39.56%

1.58%

1.55%

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

1+ DPD % 3

6.69%

5.11%

5.51%

Collections Efficiency 4

97.21%

97.28%

97.17%

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

Note: 1. 2. 3. 4.

Gross NPA% (Stage 3%) as per IND AS (including EIR adjustment). Net NPA% is as per IND AS. 1+ DPD % is for secured MSME at AUM level Collections efficiency defined for Standard Secured MSME loans as “amount of EMI received during the month, restricted to a max of 1 EMI per loan divided by EMI demand for the current month”

ECL Provisions Summary

As on June 30, 2023 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %

As on March 31, 2023 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %

As on June 30, 2022 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %

Stage 2 180 12 168 6.48%

Stage 2 160 11 149 7.02%

Stage 2 172 14 158 8.12%

Stage 1 4,499 28 4,471 0.63%

Stage 1 4,223 27 4,196 0.63%

Stage 1 3,166 19 3,147 0.61%

Stage 3 122 48 74 39.56%

Stage 3 116 45 71 39.32%

Stage 3 99 38 61 38.56%

Total 4,801 88 4,713 1.84%

Total 4,499 83 4,416 1.85%

Total 3,437 71 3,366 2.07%

Collections Approach In-house, on-ground collections teams – 92% collected digitally

Rework icons

On-ground Teams

Scalable Structure

Adaptable collection strategy as per loan stage

Branch staff from local area

Branch area- limited radius

quick attention to customer issues

In-house legal team

Backed By Tech

Analytics early warning

Delta/ Omega for focused efforts

Loan Stage

Normal

• Call center autodial

Independent collection vertical dedicated to ensure collection efficiencies

Initial stages of delinquency

• Soft collections + SMS reminders • Initiate recovery in case of

default

NPA

• Legal action if unable to recover

Tele Calling

Field Collection

Legal collection

Real-time mobile tracking

Call centre - autodial

About the company Management and Shareholder Business Credit & Risk Financials ESG

Financial Performance Trends in KPIs

AUM

4943

5327

(₹cr)

3628

Yield

16.50%

17.10%1

16.56%

Spread

7.49%

7.56%

7.63%1

7.09%

15.72%

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

Opex

Gross NPA

RoAAUM

6.09%

2.87%

10.4%*

3.83%

11.8%*

12.0%*

RoATE*

5.58%

5.42%

2.57%

2.54%

3.70%

3.72%

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

Q1 FY23

Q4 FY23

Q1 FY24

1The Company does not accrue for Interest on NPA accounts exceeding 90 days with effect from Q1 2024. It has reversed ₹ 6.2 Crore for the Interest already accrued. Adjusted for the above, Yield and Spread will be 17.10% & 7.63% respectively for Q1 FY24.

Sources of Borrowing

Diversified Borrowing Mix

Long Term Credit rating A+ (Stable)

43.1%

Lenders to the Company

1.7%

1.6%

1.5%

1.1%

9.5%

0.7%

61.6%

30.5%

8.4%

28.6%

3.1%

NCD

Private Sector Bank

NCD

Private Sector Bank

Financial Institutions

Public Sector Bank

Securitization

Foreign Bank

Financial Institutions

Public Sector Bank

Securitization

Foreign Bank

FCNB

8.6%

Q1 FY23

Q1 FY24

Number of Lenders

Public Sector Banks

Private Sector Banks

Financial Institutions (FIs)

ALM – June 2023

Upto 3 months

609

1198

Upto 6 months

920

Upto 1 Year

Upto 3 Years

Upto 5 Years

5+ Years

All figures in Rs. Cr.

1681

1524

2610

3514

4064

4125

Liablilities

Asset

Surplus

589

761

1086

550

1770

5895

6280 6280

Summary Financial Statements – Profit & Loss Account

Particulars

Q1FY24

Q4FY23

Q1FY23

Q-o-Q

Y-o-Y

Growth

FY 23

FY 22

Y-o-Y

Growth

Interest Income on Loans

Interest Income other than on Loans

Fee & Other Income

Total Income

Finance Cost

Operating Expenses

Pre-Provisioning Operating Profit

Credit Cost

Tax Expense

Profit after Tax

Basic EPS (₹/ Share)

Diluted EPS (₹/ Share)

187.91

16.0

26.0

229.9

88.6

68.4

72.9

10.1

15.8

47.0

0.52

0.49

173.1

124.6

8.5%

50.8%

595.3

382.5

55.6%

16.0

19.6

14.9

20.6

208.7

160.1

78.7

64.6

65.4

7.3

15.3

42.8

0.48

0.44

59.7

51.0

49.4

6.5

10.8

32.1

0.37

0.36

32.9%

10.2%

12.6%

5.9%

11.5%

26.0%

43.6%

48.4%

34.1%

47.7%

58.9

86.2

740.4

276.5

230.4

233.5

32.1

51.6

9.8%

46.5%

149.8

1.71

1.62

49.8%

39.5%

25.3%

30.5%

74.9%

132.2%

90.6

57.6

530.7

220.6

176.6

133.5

46.8

22.2

64.5

0.81

0.79

1The Company does not accrue for Interest on NPA accounts exceeding 90 days with effect from Q1 2024. It has reversed ₹ 6.2 Crore for the Interest already accrued. All figures in Rs. Cr.

ROE Tree

Ratios

Interest Income on Loans/ Average Loan Book

Q1FY24

16.6%1

Q4FY23

Q1FY23

16.5%

15.7%

FY 23

16.1%

FY 22

15.5%

Fee & Other Income/ Average AUM

Finance costs/ Average Borrowings

Spread

Net Interest Margin/ Average AUM

Operating Expenses/ Average AUM

Credit Cost/ Average AUM

Profit after Tax/ Average AUM

Leverage (Avg AUM/ Avg Tangible Equity)

RoATE

2.1%

9.5%

7.1%1

9.1%

5.4%

0.8%

3.7%

3.22

1.7%

9.0%

7.6%

9.5%

5.6%

0.6%

3.7%

3.20

2.5%

8.3%

7.5%

9.5%

6.1%

0.8%

3.8%

2.73

2.2%

8.7%

7.5%

9.5%

5.8%

0.8%

3.7%

2.97

12.0%

11.8%

10.4%

11.1%

2.2%

8.1%

7.5%

9.7%

6.8%

1.8%

2.5%

2.63

6.6%

Balance Sheet

Particulars Assets Cash and Bank Balances Receivables Loan Assets Investments Other financial assets Current & Deferred tax assets (Net) Property, Plant and Equipment etc. Other non-financial assets Total Assets Liabilities and Equity Derivative Instrument Payables Borrowings Other financial liabilities Non-Financial Liabilities Equity & Reserves Total Liabilities and Equity

All figures in Rs. Cr.

Q1FY24

Q4FY23

Q1FY23

440 18 4,713 623 4 - 297 21 6,116

1 20 3,903 249 16 1,927 6,116

278 10 3,366 665 5 34 299 6 4,663

- 13 2,817 239 22 1,572 4,663

400 11 4,415 607 4 - 297 12 5,746

- 13 3,739 251 16 1,727 5,746

FY 23

400 11 4,415 607 4 - 297 12 5,746

- 13 3,739 251 16 1,727 5,746

FY 22

335 8 2,983 848 4 34 299 4 4,515

- 12 2,940 250 26 1,287 4,515

About the company Management and Shareholder Business Credit & Risk Financials ESG

Governance Strong ESG framework, serving the underserved in tier 2 & 3 locations

Focus on financial inclusion

Governance framework

Underserved Customers

90.4% Women borrowers1

~8% Secured MSME borrowers new to formal lending

3 Independent Directors

4 Nominee Directors

1 Woman Director

Underbanked regions

Tier 2/ 3 locations primarily served by SBFC

Local staff hired from tier-2/ 3 locations

Board committees for oversight

Audit Committee

Nomination & Remuneration

Business Review & Monitoring

Economic gains for customers

~81% MSME credit from informal sources2

30-60% p.a. interest rate charged by informal lenders2

Risk Management

IT Strategy

IT Steering

CSR

1Implies borrowers and co-borrowers; 2As per CRISIL Industry Report

CSR towards Skill development

In our effort to support the Skill India mission, we initiated SBFC Gurukul. The program is run under the guidelines of National Apprenticeship Promotion Scheme and National Apprentice Training Scheme , where we groom and train fresh undergraduates and graduates in skills which matches their aptitude and interest.

CSR towards Education

The aim is to transform the lives of less privileged children by maximizing impact in the education sector by focusing on upgrading basic infrastructure facilities, electrical work, sitting benches, furniture of staff room and stationary in schools.

The Contribution from SBFC has been given to Yuva Unstoppable which is used to improve the Shri Swaminarayan Vidyalaya, infrastructure of Manipura, Ahmedabad.

Representation by NAPS employee as a Speaker at Akhil Bhartiya Shiksha Samagam Inaugurated by The Honourable Prime minister of India

Before

After

THANK YOU!

PRIVATE & CONFIDENTIAL

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