SBFCNSE27 October 2023

Sbfc Finance Limited has informed the Exchange about Investor Presentation

SBFC Finance Limited

October 27, 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

Dear Sir/ Madam,

Sub: Investors Presentation

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

Further to our letter dated October 23, 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 September 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 Encl: As above

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 Q2 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 – FY24 H1 Performance

Size and Growth

Distribution

Granular Book

Asset Quality

Liability Profile

Profitability

5,803 AUM YoY +43%

4,787 Secured MSME AUM

YoY +55%

1,356 Secured MSME Disbursal Value YoY +25%

13,720 Secured MSME Disbursal Volume

YoY +25%

171 # Branches

3,278 Employees

97.9% % Secured

9.89* | 0.86* Average Ticket Size: Secured MSME / LAG (Lakhs)*

2.37% GNPA YoY -13 bps

1.33% NNPA YoY -30 bps

2,339 Tangible Net worth

100 H1 FY24 PAT YoY +47%

CRAR 45.0% Capital Adequacy

3.8% Return on AAUM

16 States & 2 UTs Pan India presence

1,12,235 # live customers

0.8% Credit Cost

23 Lender Relationship Count

100% in-house Sourcing

LTV 42.6% / 66.9% Secured MSME / LAG

44.6% PCR

A+ (Stable) Credit rating1

16.7% H1 FY24 Yield YoY +79 bps

7.3% Spread YoY -27 bps

Note: All values in ₹ Cr unless stated otherwise, All metrics as of / for the H1 FY24 unless stated otherwise; 1Long term credit rating by ICRA , India Ratings and CARE Ratings

Executive Summary – Q2 FY24

Asset Under Management

Disbursement1

5803

701

Branches

171

+43%

+9%

+25%

+7%

+35

Gross NPA

2.37%

Yield / Spread

16.8% / 7.5%

Opex to AAUM

5.52%

-13bps

-17bps

+74 / -15 bps

+29 / +37 bps

-70bps

+10bps

PAT

RoAAUM

3.84%

RoATE

10.40%

+48%

+12%

+8bps

+12bps

-32bps

-159bps

1Secured MSME All figures are in ₹ Cr

YoY

QoQ

About the company Management and Shareholder Business Credit & Risk Financials

171 branches 140 Cities 16 States 2 UTs

Executive Summary

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 17.25% AUM

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

1CRISIL Industry Report

6 6

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

1156

2019

778

2018

All figures in ₹ Cr

AUM

PAT

1648

2020

2221

2021

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

4943

150

50,000 customers

3192

Equity Listing on NSE and BSE

5803

100

2022

2023

2024 (H1)

About the company Management and Shareholder Business Credit & Risk Financials

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 and IR

Chief Human Resource Officer

Chief Technology Officer

Chief Operating Officer

Chief Collection Officer

Board of Directors Strong corporate governance backed by long term investors

Independent

Neeraj Swaroop

Chairman of the Board

Rajesh Agrawal Jt. Managing Director, Ajanta Pharma

Surekha Marandi Ex Executive Director, RBI

Jonathan Tatur Investments Clermont Group

Arjun Sakhuja Investments Clermont Group

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

12.41%

10.57%

10.25%

2.74%

64.03%

Promoters

Foreign Portfolio Investors

Foreign Companies

Mutual Funds, AIF, Insurance, Banks

Individuals, Bodies Corporate

# Status as on September 30 2023

About the company Management and Shareholder Business Credit & Risk Financials

Business Momentum Delivering rapid growth in recent years

CAGR: 49%

3192

20%

73%

4943

18%

79%

10%

2221

25%

65%

4070

19%

76%

Simplify graphic

YoY : 43%

QoQ : 9%

5327

16%

5803

15%

81%

83%

Mar-21

Mar-22

Mar-23

Q2 FY 23

Q1 FY 24

Q2 FY 24

Secured MSME

LAG

Others

Secured MSME

LAG

Others

All figures in ₹ Cr.

AUM

Business Momentum – Secured MSME Growth in both Volume & Value

AUM

YoY: 55%

4328

3097

Disbursement Value

Disbursement Volume

QoQ: 11%

4787

560

YoY: 25%

655

QoQ: 7%

701

YoY: 25%

QoQ: 6%

5672

6655

7065

70…

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 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 period

23%

18%

23%

13%

16%

18%

Co-origination Disbursement (₹ Cr)

Co-origination AUM (₹ Cr)

128

116

160

843

699

387

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 FY 24

1Percentage is on Total Secured MSME Loans

Business Momentum No concentration risk & well distributed growth

Present in 16 states, 2 UTs covering 140 cities via 171 branches

Driven by steady rise in AUM per branch

8 6

20 6

Branch Mix

South North

East West

17.9%

39.1%

₹5803 AUM Mix

33.9%

9.1%

South North

East West

# Branches

171

<12 months

>12 & <36 months

>36 months

50 45 40 35 30 25 20 15 10 5 0

Q2 FY 23

Q1 FY 24

Q2 FY 24

Vinatage =<12M

12M<Vintage<36M

Vintage>=36M

All figures in ₹ Cr

About the company Management and Shareholder Business Credit & Risk Financials

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

Bank Statements with Limited Transactions

Small scale businesses lack resilience

•

• •

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

Analytics driven ‘customer segmentation’ Triangulation of income sources from multiple data points

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

Deep understanding of customer behavior (over 57K MSME customers) & strong knowledge of local markets (16 states, 2 UTs)

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

> 650 & < 700

7.4% 4.3% 8.5%

7.9% 2.1% 7.7%

7.7% 1.5% 7.2%

79.8%

82.3%

83.6%

> 7002

CIBIL Score

Mar'22

Mar'23

Sep'23

> 700

> 650 & < 700

<650

0/ -1

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

94.60% AUM secured by self occupied residential/ commercial property

42.59% LTV

100% co-borrower Spouse, parent acting as one

91.4% women Borrowers/ co-borrowers

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

Credit Indicators

Gross NPA %1

2.50%

2.54%

PCR

36.0%

39.6%

44.6%

2.37%

Net NPA %2

1.62%

1.55%

1.33%

Q2 FY 22-23

Q1 FY 23-24

Q2 FY 23-24

Q2 FY 22-23

Q1 FY 23-24

Q2 FY 23-24

1+ DPD %3

5.97%

5.51%

5.27%

Collections Efficiency %4

97.85%

97.17%

97.49%

Q2 FY 22-23

Q1 FY 23-24

Q2 FY 23-24

Q2 FY 22-23

Q1 FY 23-24

Q2 FY 23-24

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 September 30, 2023 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %

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

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

Stage 2 225 13 212 5.91%

Stage 2 180 12 168 6.48%

Stage 2 153 12 141 8.04%

Stage 1 4,811 30 4,781 0.63%

Stage 1 4,499 28 4,471 0.63%

Stage 1 3,539 22 3,517 0.61%

Stage 3 122 55 67 44.62%

Stage 3 122 48 74 39.56%

Stage 3 95 34 61 36.05%

Total 5,158 98 5,060 1.91%

Total 4,801 88 4,713 1.84%

Total 3,787 68 3,719 1.80%

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

Financial Performance Quarterly Trends in KPIs

AUM

(₹cr)

5327

5803

4070

Yield

17.10%1

16.56%

17.26%1

16.84%

Spread

7.63%1

7.89%1

7.61%

7.09%

7.47%

16.11%

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 FY 24

Opex to AAUM

Gross NPA

RoAAUM

6.22%

2.50%

2.54%

10.72%

11.99%

10.40%*

RoATE

3.84%

5.42%

5.52%

2.37%

3.76%

3.72%

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 FY 24

Q2 FY 23

Q1 FY 24

Q2 FY 24

1Interest Income on credit impaired loan assets which are classified as Non Performing Assets, is not being recognized unless realized as a matter of prudence. The Company has reversed Rs 6.2 Cr in Q1 FY 24 and Rs 5.1 Cr in Q2 FY 24 for the Interest already accrued. *The company has received an equity infusion of Rs. 600 crore in the current quarter

Financial Performance Half-yearly Trends in KPIs

(₹cr)

4070

AUM

4943

5803

Yield

Spread

17.19%1

16.71%

7.56%

7.41%

7.77%1

7.29%

15.92%

16.28%

H1 FY 23

H2 FY 23

H1 FY 24

H1 FY 23

H2 FY 23

H1 FY 24

H1 FY 23

H2 FY 23

H1 FY 24

Opex to AAUM

Gross NPA

RoAAUM

6.16%

2.50%

2.57%

10.58%

3.79%

11.56%

11.10%*

RoATE

3.78%

5.45%

5.47%

2.37%

3.72%

H1 FY 23

H2 FY 23

H1 FY 24

H1 FY 23

H2 FY 23

H1 FY 24

H1 FY 23

H2 FY 23

H1 FY 24

1Interest Income on credit impaired loan assets which are classified as Non Performing Assets, is not being recognized unless realized as a matter of prudence. The Company has reversed Rs 11.3 Cr in H1 FY 24 for the Interest already accrued. *The company has received an equity infusion of Rs. 600 crore in the current quarter

Sources of Borrowing

Diversified Borrowing Mix

Long Term Credit rating A+ (Stable)

Lenders to the Company

1.2%

10.5%

1.2%

31.5%

22.6%

0.7%

8.3%

41.2%

49.6%

6.0%

15.7%

10.3%

NCD

Private Sector Bank

Financial Institutions

Public Sector Banks

NCD

Private Sector Bank

Financial Institutions

Public Sector Banks

Securitization

Foreign Bank

Securitization

Foreign Bank

FCNB

Q2 FY23

Q2 FY24

Number of Lenders

Public Sector Banks

Private Sector Banks

Financial Institutions (FIs)

ALM – September 2023

Upto 3 months

641

1290

Upto 6 months

962

Upto 1 Year

Upto 3 Years

Upto 5 Years

Upto 5+ Years

All figures in ₹ Cr

1920

1614

2795

3472

4379

3950

Liablilities

Asset

Surplus

649

958

1181

907

2401

6360

6759 6759

Summary Financial Statements – Profit & Loss Account for Q2 FY24

Quarter Ended

Growth (%)

Particulars H1 FY24 Performance

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)

30 September 2023

2051

247

0.52

0.51

30 June 2023

1881

230

0.52

0.49

30 September 2022

Q-o-Q

Y-o-Y

9.3%

-9.3%

2.0%

7.2%

0.6%

10.7%

11.9%

44.1%

8.4%

25.3%

39.1%

43.1%

28.3%

46.2%

12.0%

47.6%

143

177

0.41

0.39

Summary Financial Statements – Profit & Loss Account for H1 FY24

Half Year Ended

Growth (%)

Particulars H1 FY24 Performance

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)

30 September 2023

30 September 2022

3931

477

178

144

155

100

1.04

1.00

267

337

122

110

105

0.78

0.75

Y-o-Y

47.2%

8.0%

25.6%

41.3%

45.7%

30.9%

46.9%

47.1%

Annual

31 March 2023

595

740

276

230

234

150

1.71

1.62

ROE Tree

Ratios

H1FY24

H1FY23

Interest Income on Loans/ Average Loan Book

16.7%1

15.9%

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)

2.0%

9.5%

7.3%1

9.3%1

5.5%

0.8%

3.8%

2.9

2.4%

8.4%

7.6%

9.7%

6.2%

0.8%

3.8%

2.8

FY 23

16.1%

2.2%

8.7%

7.5%

9.5%

5.8%

0.8%

3.7%

3.0

RoATE

11.1%

10.6%

11.1%

FY 22

15.5%

2.2%

8.1%

7.5%

9.7%

6.8%

1.8%

2.5%

2.6

6.6%

Balance Sheet

Particulars

Assets Cash and Bank Balances Derivative Instrument 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 ₹ Cr

30 September 2023

Quarter Ended 30 June 2023

30 September 2022

714 4 12 5,060 476 8 5 296 6 6,581

- 54 3,657 261 10 2,599 6,581

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

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

393 - 9 3,719 834 4 31 298 6 5,294

- 13 3,439 210 19 1,613 5,924

Annual 31 March 2023

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

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

THANK YOU!

PRIVATE & CONFIDENTIAL

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