Sg Finserve Ltd (BSE: 539199) Q4 2026 Earnings Call dated Apr. 16, 2026
Corporate Participants:
Vinay Gupta — Chief Executive Officer
Sanjay Rajput — Chief Financial Officer
Analysts:
Abhi Jain — Analyst
Kushal Jajodia — Analyst
Parin Gala — Analyst
Mehul Panjwani — Analyst
Nikhil Chandak — Analyst
2
Raghav Bogoria — Analyst
Manish — Analyst
Praveen Kumar Garg — Analyst
Varun Gajaria — Analyst
Rajat Agarwal — Analyst
Akhilesh Kumar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the SG Finserve Q4 FY ’26 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded.
I now hand the conference over to the management. Thank you.
Vinay Gupta — Chief Executive Officer
Hi. Jai Hind, everyone. My name is Vinay Gupta. I’m the CEO of your NBFC SG Finserve Limited. With me I have my senior colleagues, Mr. Deepak Goel [Phonetic], the Chairperson; Mr. Anubhav Gupta, Group Chief Strategy Officer; Mr. Sanjay Rajput, the CFO; and Mr. Lalit Gupta, Chief Business Officer.
I’ll just give brief about the financial performance which has been very, very excellent for the SG Finserve for the year ended March ’26. We have done operating income of INR334 crores, 96% growth year-on-year basis. Loan book INR3,936 crores, posting a growth of 75% on year-on-year basis. Profit after tax INR128 crores, year-on-year growth of 58%. So this is the — this signifies the overall performance of the company.
Similar performance has been witnessed in the Q4 also. In Q4, our profitability has gone up to INR43 crore, INR42 crore in the pack which is grown from INR32 crore from previous quarter. 30% growth on quarter-on-quarter basis.
Our AUM currently INR3,936 crore is an all time high, which is backed by our core business which is supply chain, new business which we have added and commercialized factoring business in the month of March. Our gross disbursement for the full year has been across the benchmark of INR25,000 crores which shows the entire digital capability and invoice financing capability which we as NGFC have.
So this was the opening remark. Over to Emkay.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Abhi Jain with AJ Capital. Please go ahead.
Abhi Jain
Hi. Good afternoon. Am I audible?
Vinay Gupta
Yes, please go ahead. You are audible.
Abhi Jain
Hi, Mr. Gupta. So, sir, my question is basically to understand the competitive advantage that your business model has because, obviously, you have been maintaining a nil NPA and I think even in your investor like you have guided for that you plan to maintain your NPA that nil. So I just want to understand or you can you help the investors understand the business model a bit better? I mean, how are you able to forecast that going forward also your NPA will be nil. That is my first part of the question.
Vinay Gupta
So our core business is supply chain business. The inherent strength of supply chain business is because it has a tripartite relationship between the anchor, borrower and the financier. Across all the NBFC and banks who are operating in the supply chain space, the metrics of the capital structure and the credit cost remains the same. For us the advantage is this, unlike other bank of NBFC, our core business is supply chain. More than three-fourth of our business is supply chain. So that has two advantage.
Abhi Jain
Yeah, okay. So that part I understand. But I wanted to get more flavor around how even within the supply chain group, right, yours is such a pristine quality, fair quality business. I mean what advantages do you have? What is the business model in terms of how do you ensure that the customers or your borrowers have very little room to default? So just want to understand, is it the buffers around liquidity? Is it the buffers around the loan to value? I understand that in most of it you are also doing the invoicing finance where basically you are dealing with Grade A end customers and they pay directly to you. So that I understand. But can you get more flavor? Because even within the supply chain cohort, maintaining a nil NPA or no NPA is unheard of. So could you just help us understand that?
Vinay Gupta
A couple of things. One, we are doing only purchase financing which is backed by invoice. So the end use is monitored, number one, it is very, very short-term in nature. It is not a lumpy lengthy loans. Our average churn cycle is 45 days. If you look at our disbursement done in Q4 versus a book, we would have done a disbursement around INR7,700 crore or against our book of INR3,900 crore, which signifies that we have churned the entire book in 45 days on an average basis. So by giving a short-term in nature with an end use monitored and invoice back and the beneficiary is also locked.
So when the dealer is procuring for an anchor, we don’t give hand over the money in the pocket of the dealer. We directly pay to the anchor which ensures the continuity of that supply has to — the continuity of supply will remain only if they remain disciplined in my repayment because they will procure further only when they pay me for the existing invoices. So it creates a churning and the stickiness between the anchor dealer and the financier. So that is the overall supply chain construct.
On top of that we have a very, very robust early warning where we monitor the churning cycle of all our dealers on a regular basis. And wherever we see there is any challenge, we don’t wait for the account to go into a bad shape. We chip in, in terms of our own relationship team. We do loop in our anchors also to make sure that the dealers remain disciplined in terms of the repayment capacity.
Abhi Jain
Understood. Can you give some more flavor around this early warning signal system that you have created? Can you give us more flavor around how data is — how you’re using data? Because in today’s day and age, I’m sure that data is helping you a lot and without data to get any competitive advantage, it’s not sustainable. So can you just help us understand this early warning signal system that you have created?
Vinay Gupta
Understood. So to put it simply, it is not very, very complicated. It is a very, very simple structure we follow. We have funded a particular procurement. The procurement has to translate into a sale. The sale translates into receivable, the receivable translate into cash. The cash has to come back to me as a financier to repay my existing invoices so that the space get created for the new procurement. Wherever we see this space is getting elongated, the dealer or the borrower is not able to churn it in a better manner then that create a early warning for us. And then we try and understand whether the receivables are stuck or inventory stuck or they don’t need any further procurement any longer. So that kind of a ongoing processes there with us which we follow across all our dealers.
Abhi Jain
Right. My final question on this is that, since you’re dealing with these Grade A anchors, which helps you and gives you the confidence to go ahead and disburse and obviously because of the NPA cycle is curtailed. Now, as you’re growing your book and eventually the speed at which you grow your book, do you think that there is enough space available to keep ensuring that you only deal with Grade A anchors where the delinquency will be very low? Or do you think that there is a saturation point after which you will have to move to probably a Grade A minus kind of an anchor, Grade B plus kind of an anchor? So just give us a flavor of that.
Vinay Gupta
So the scalability in this space is huge. Out of top 500 corporates, if we talk about not even 100 are active in a supply chain state. So there’s a huge space for the new anchors to follow the trend of the successful anchors to come and start doing supply chain, number one.
Number two, the anchors who are already doing supply chain, their entire sales is not yet covered. That’s like back of the hand calculation. My understanding, 25% to 30% of their sales is only covered. Still there is a lot of room left for those anchors to also deep dive and get the dealers onboarded under the organized supply chain programs. So the space is humongous. So there’s no saturation I see in my side at least for next 10, 15 years.
Abhi Jain
Right. And finally for the guidance that you’ve given in the deck, is it for a prolongated medium-term like three- to four-year or is this for FY ’27?
Vinay Gupta
It is ongoing basis. I think this is the kind of guidance we will maintain on an ongoing basis. If I were to break it down probably for FY ’27, our AUM growth may be not 25% to 30%, it will be upward of 30%. But in a medium- to long-term, this will be the average of 25% to 30%. Our aspiration on the AUM for FY ’27 is around 35%, 40%.
Abhi Jain
Sure, sir. Thank you. And all the best.
Vinay Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Kushal Jajodia with Kushal Jajodia & Associates. Please go ahead.
Kushal Jajodia
Yeah, superb results. Just wanted to understand having a clarity on two, three things on the financial aspect. In the financial results I could see there has been a rise in the employee benefit expense from INR2 crore to INR6 crore. INR3.5 crore plus, if I add that INR2.54 crore on account of ESOP then cumulative it approximately reaches INR6 crore. So, of course, in the LinkedIn page we have seen many employees have been added. So there have been a threefold jump in the employee benefit cost. Can you explain any senior management or something have been employed or something like that?
Vinay Gupta
No, Kushal, I think you — the INR2.5 crore which you referred was not related to this financial year. If you read this INR2.5 crore is mentioned as a footnote related to year ended March 31 [Speech Overlap]
Kushal Jajodia
Okay. Full year ’25. Okay. Okay. Okay. So it’s only INR1.5 crores addition in the employee cost in this current quarter, right?
Vinay Gupta
Right.
Kushal Jajodia
Right. Just one more question I have regarding the AUM. Since around INR350 crores, approximately INR350 crores we have received through warrants. So basically that will be employed only in the current business, right, not in the AIF-related business? Just wanted to understand that.
Vinay Gupta
So there’s no segregation, Kushal, on the equity. It’s the equity pool. We currently sitting with the INR1,481 crore for equity, INR1,481 crore for payment of warrants converted in the month of April. So it’s a private equity. Currently we are leveraged at 1.9x on the stand-alone. If as and when we enter into the new businesses this is same pool of equity will get used.
Kushal Jajodia
But for financial year ’26-’27 we are not thinking to go venture into new business, right? Or are we thinking of doing that?
Vinay Gupta
So, Kushal, there’s a lot of groundwork is going on because it is subject to a lot of regulatory approvals. It has [Speech Overlap] business plan. We need to have a right set of people. So it is subject to many things. So difficult for me to know really visualize whether it will happen in FY ’27 or ’28 because it is subject to many things.
Kushal Jajodia
Okay. And now the last question I have it is not pertaining to only for financial year ’26-’27. In general, I wanted to ask in future if you have a target to achieve future basically to reach a higher AUM. So at that time what we are basically will we be funding through additional capital like preferential allotment or are we thinking to borrow money from the banks or NBFCs to fund the additional AUMs?
Vinay Gupta
So we currently have enough bank loan available with us which are not yet been utilized, available in the — already available limit itself to utilize further.
Kushal Jajodia
So can I know the limit, sir? What is the current limit of the banks you have?
Vinay Gupta
It is more than [Speech Overlap]
Kushal Jajodia
Approximate, sir. I am not telling you to give me the exact figure, approximate, sir, via bank limits?
Vinay Gupta
More than INR3,000 crore.
Kushal Jajodia
INR3,000 crore? Okay, okay.
Vinay Gupta
It is more than — it will be somewhere between INR3,000 crore to INR3,500 crore, number one. Number two, our leverage currently is 1.9x. If you were to compare us with any other NBFC, I think the leverage of 3x to 4x is acceptable leverage for the NBFC business. But we understand we are in the initial stage of our growth. So that’s why we are going little cautious. But there is room left, there is enough headroom left to leverage ourselves without being dependent on any fresh equity ratio.
Kushal Jajodia
So basically as per my understanding with the bank limits you have approximately INR3,000 crore to INR3,500 crore and the capital we have of INR1,500 crores. So we are well — basically we can reach AUM of INR6,000 crores to INR7,000 crores easily without asking for additional capital, right, sir, if I’m not wrong?
Vinay Gupta
INR10,000 crore is [Speech Overlap]. INR10,000 crore of AUM we can easily reach in three to four years without being dependent on any fresh equity because we will accumulate profit and there is a enough bank lines available and more bank lines will get added. So INR10,000 crore AUM with 3x leverage, we are not dependent on any fresh equity.
Kushal Jajodia
Okay. And sir, one last question. Sorry, I’m asking again. In the previous participant’s question you mentioned that in the current business three-fourth of the business is coming through basically financing of supply chain. So what is that one-fourth additional component where it is coming from, the additional income, basically?
Vinay Gupta
So that is the process which we do in our ecosystem. So when we meet the anchors and the dealers. So we know within that ecosystem there is a requirement which is beyond supply chain. I can give only few examples without diversing too much detail. But if a dealer says okay, hey, you are financing my invoices for the procurement. But I need some working capital also. Maybe I need some term funding for my business expense extension also. Maybe I need some sort of a lap also. So those kind of requirement comes when we meet them. Although our cost of acquisition for that kind of a cost cut business is virtually zero. But we end up doing that business also which helps us also and helps our borrowers also.
Kushal Jajodia
Okay, great, sir. Sir, I think, sir, my personal opinion, your 35% is very low. Your APL Apollo Group company target for 100% growth this year, sir. I hope so. All the best, sir.
Vinay Gupta
Thank you.
Kushal Jajodia
Thank you.
Operator
Thank you. The next question comes from the line of Parin Gala with SageOne. Please go ahead.
Parin Gala
Yeah. Hi, Vinay. Good afternoon. Vinay, 4.8% ROA you think is a peak that we have achieved or there is room to grow more?
Second question is that, what is the comfortable debt to equity that you or the organization have in mind? And by when do you think that leverage can be achieved?
And the third question is little bit — can you explain a little bit on your [Indecipherable] platform? I believe we have the RBI approval as well. And how do you intend to compete when three to four large platforms are already operational? So where does our right to win state that?
Vinay Gupta
Sure, I’ll answer one by one. First question first on the ROA, I think 4.8% is a very healthy ROA. Anything more than this it can go up to 5%. But at the same time we may look at 4.5%. So I think ROA will range between 4.5% to 5%. It also is a calculation around leverage also because if our leverage goes up, the ROA tend to go down, the ROE tend to go up. So I think 4.5% to 5% will be our ROA. That is the kind of number which we have in our mind. Number one.
Number two on the equity side, currently we are at around 2x leverage. As the management we think we can go up to 3x. That is the number which we have in sight. But that will happen over a period of phase manner maybe two years to three years. That we will not try to leverage ourselves on immediate basis because of very, very conservative lender. So we grow very, very cautiously.
And the third on the factoring and trade. So the license of factoring has two angles. One is the bilateral factoring which are already commercialized and we executed the transaction. If you look at our results closely, INR175 crore is the factoring book which is outstanding on 31 March. So that has already begun.
On the trade. We have already signed up the agreement. We have already onboarded the two trade platform, RXIL and M1xchange. We are evaluating the leads and sooner or later we will get live in terms of booking the trades — factoring business also there.
Parin Gala
When do you expect to go live?
Vinay Gupta
I think this Q1 only.
Parin Gala
Okay. And sorry, I missed, before that you said two platforms. I mean, you are going to go on other platforms or have our own platform?
Vinay Gupta
No, no, no. We don’t plan to have any platform on the trades. We only participate on the existing trades, regulated entities, licensed by RBI. We don’t plan to do because that’s a different ball game altogether. That’s not the business which we are in. We are a lender, we are not a fintech.
Parin Gala
Understood. Okay. Thank you. Good luck.
Operator
Thank you. The next question comes from the line of Mehul Panjwani with 40 Cents [Phonetic]. Please go ahead.
Mehul Panjwani
Hello sir. Thank you so much for the opportunity. Since we are doing so well now, what other NBFC areas do we have plan to — expand into?
Vinay Gupta
Our focus will remain supply chain. But supply chain has multiple colors. We are already doing Tier 1 dealer financing. We have started doing Tier 2 dealer financing also. We have started banking with three big deep Tier 2 dealers of Tier 1 dealers. So that has been a successful testing run we have done in last couple of months. So that is the new business or the new territory we will enter into. Naturally we will continue to onboard new anchors, enter into new industries. And continue to expand ourselves on the dealer financing.
Third factoring as I answered on my previous question, the factoring has just begun, that will continue to grow. Considering it’s just the beginning, I think that will add another cushion for us to grow the factoring.
Beyond the traditional supply chain, then the cross-sell business in terms of whether we are doing lab or we’re doing down funding or a stand-alone working capital financing, that’s something which we keep on doing more of an opportunistic kind of transition.
Mehul Panjwani
Okay. Sir, my another question is around the geographical spreads. So are we across — I mean, are we pan India or we are focused in certain geographies because I’m new to the company?
Vinay Gupta
So we’re currently catering to 30 locations pan India, but the 30 location is more of a hubs, from within one particular location it covers around 100 kilometer kind of a radius. So currently except the Northeast Seven Sisters, I think we are fairly present across the country. We have existing customer base on those all locations.
Mehul Panjwani
Right. And sir, some insight around the dealers. So are we specifically focusing for dealers into certain industry or are we — I mean, if you can throw some light around this?
Vinay Gupta
There’s no specific industry criteria which we have in our mind. However, supply chain as a business works only in few typical industries. So we are definitely very big on auto, steel, construction, white goods, IT peripherals. These are the industry which suits the supply chain structure. However, there are few industries like FMCG which remain aloof to supply chain kind of business that we’ll continue to evaluate as and when the opportunity comes.
Mehul Panjwani
Okay. And sir, what is the concentration in terms of our clients? So if we — how many clients do we have for that AUM, which you mentioned in our opening remarks?
Vinay Gupta
Our average ticket size for a borrower would be around INR5 crores in terms of our outstanding AUM if we have to calculate. So the concentration is not much.
Mehul Panjwani
Right, right. Thank you so much sir and wish you the best.
Vinay Gupta
Thank you so much.
Operator
Thank you. The next question comes from the line of Nikhil Chandak with Shanghvi Family Office. Please go ahead.
Nikhil Chandak
Yeah, hi, sir. Longer term, do you also get into the retail side of like mass retail? I read somewhere you’re trying to get into LAP as well. So I know you said there’s a lot of scope to grow in supply chain financing but say in the next two, three years what other segments are you going to explore would you get into, for example, housing finance and LAP you mentioned. So what are the segments?
Vinay Gupta
So as a DNA of our NBFC, no we are only financing the business plans. So business houses. So we are not planning to enter into any retail consumer financing. As of today also we have nil, and we don’t have any visibility to enter into that business. So that is not a business we understand as of now. When I said micro lab, that micro lab is also a form of giving a term financing to a business person who is seeking money to expand the business.
Nikhil Chandak
And — understood. And who do you see as competition which are the segment, which are the players are competing with you in this segment?
Vinay Gupta
Honestly as a — again as a philosophy we don’t believe in competition. We think — I think we believe in co-survival. So there’s enough space which is available for everybody. So there are — there’s a one set of banks then the large pedigree banks then there’s a large NBFC then there’s a middle layer NBFC like us. So I think there’s a space for everybody and we play in our own space.
Nikhil Chandak
Okay. Okay. Thank you so much. Thank you.
Operator
Thank you. The next question comes from the line of Ahmed Jain [Phonetic], an individual investor. Please go ahead.
Nikhil Chandak
Hi, sir. Thanks for the opportunity. My question is more around PSB Xchange. Right now on PSB Xchange we have SBI, Bank of Borda and other PSU banks. My question is, in three years’ time what does supply chain finance market will look like and where does exactly NBFC like SG Finserve within that structure? So this is more of a forward-looking question but I just wanted to have an understanding about this from you.
Vinay Gupta
So my personal opinion on this is like, more banks are joining and doing supply chain business. It only gives a confidence of the borrower and the industry on a supply chain business. Today, the large part of financing is done through a mode of CC, OD, WC, real-term financing. Supply chain financing continues to be niche. My personal belief, again, if more banks and more players are coming to the market, the market itself will grow. If the market will grow, there will be space for everybody to grow.
Nikhil Chandak
Yeah, that’s it. I had only one question. Thank you.
Operator
Thank you. The next question comes from the line of Janhvi Patel, individual investor. Please go ahead.
2
Hello sir. Congratulations on your best results so far. I just wanted to know the guidance for the next two years.
Vinay Gupta
Well, thank you so much for your well wishes ma’am. I know — first of all, for next two years we just want to do what we have done this year, just repeat. The excellent results we have posted in Q4 and FY ’26, we just want to follow that same path in FY ’27. FY ’27, the way we look at our current capital structure, the current — that we have raised the fresh equity also, I think the numbers looks more promising because we have more capital to support our growth. Maybe our — the numbers as we are seeing on the paper today, other numbers will be far more better in FY ’27.
2
Okay. Thank you, sir. All the best.
Vinay Gupta
Thank you so much.
Operator
Thank you. The next question comes from the line of Raghav Bogoria [Phonetic] with Lindsay Securities. Please go ahead.
Raghav Bogoria
Hello sir. Am I audible?
Vinay Gupta
Yes, sir, very much audible. Please go ahead.
Raghav Bogoria
So what will be our share of loans given to group company entities?
Vinay Gupta
So all these are related party transactions are reported to the Board and approved by audit committee. Our related party exposure would be what — lesser than INR100 crores currently, Sanjay?
Sanjay Rajput
Less than INR100 crores.
Vinay Gupta
Less than INR100 crores.
Raghav Bogoria
And what would be the loans to the channel financing for the group company? What would be the share amongst overall?
Vinay Gupta
I think it should be around 30%, 29% to 30%.
Raghav Bogoria
Sir, is my understanding right that the recent increase in steel prices have really helped your AUM?
Vinay Gupta
Steel prices have not gone up in the month of March. This is my understanding. If you ask me, we have received massive collection in the last week of March. Our AUM would have been even closed higher. But if you look at our average AUM, our average AUM for the full financial year has grown even higher than our end of period even. We closed our average AUM for FY ’26 at INR2,640 crore, against our average AUM for FY ’25 at INR1,282 crore. The growth is 106%. We are almost — we have doubled our average AUM. So that cannot be a one-off instance because of steel price rise.
Raghav Bogoria
Even also a lot of volume — but just trying to understand if it helped a lot.
Vinay Gupta
No, no, it did. It did not. I was just trying to give you more elaborate answer that our numbers have gone up, profitability has gone up. So it is not one-off steel price rise as a result.
Raghav Bogoria
Okay. Thank you, sir.
Vinay Gupta
Thank you.
Operator
The next question comes from the line of Manish [Phonetic], an individual investor. Please go ahead.
Manish
Good afternoon, sir. So first of all congratulations on the outstanding performance this quarter. So I have one question. Do you think we’ve been conservative in our guidance at least during the course which happened during the last two quarters? And especially considering the super performance that the company has shown this quarter. Are we in any way kind of under committed but believe that we will overachieve our guidance the upcoming year?
Vinay Gupta
Yes, you are right on your observation. We were conservative last quarter because there was reasons, there was a change in management. There was a new management coming, new people coming. So we wanted to go a little slow. We wanted to consolidate ourselves and see in which direction we want to grow. But under committing, over delivering is something which suits best to our philosophy. Today, also when we are looking at giving a guidance of 25%, 30% AUM, that again is a conservative guidance.
Manish
Yeah. So it was the reverse — under the previous management. So I thought this quarter was an outstanding performance, especially in light of the guidance or maybe the gloomy picture which was being portrayed during the last two quarters. So considering that, I think it has been a phenomenal performance. So thank you and wishing that the company does much more better in the days to come. Thank you.
Vinay Gupta
Thank you so much, Manish. But two clarification. Number one, it was not the previous management who gave this guidance. I myself has given the lower guidance because we thought we will be conservative in our guidance, number one. Number two, we have not portrayed any gloomy picture. It was more of an interpretation. We were very, very clear that okay, this is a conservative number we are giving. And because we are the new management, new change in hand, we wanted to give a conservative. It was very, very clearly articulated that we are doing conservative guidance.
Manish
Yeah, look, I use the word gloomy because of the fact that the guidance which was given, right, it was not for one particular quarter but it was across various quarters. So there are things which were being told that we will achieve some X amount of AUM profitability and so on. And later on there are clarifications being given in terms of exit run rate and so on. So I understand — I mean I only hope that the conservative is a lot more conservative in terms of kind of giving any guidance going forward. But net-net yeah, I don’t want to kind of take away the good performance that has been shown this quarter. So thank you all.
Vinay Gupta
Sure. Thank you.
Operator
Thank you. The next question comes from the line of Praveen Kumar with Pune E Stock Broking Limited. Please go ahead.
Praveen Kumar Garg
Hello. Am I audible?
Vinay Gupta
Yes, yes. Please go ahead.
Praveen Kumar Garg
Sir, my first question is, sir, like what are we doing in terms of — like how are we managing NPS as they are zero? So what — I mean what we are doing different that we have one of the best NPAs in the industry? So I wanted to understand the process or everything.
Vinay Gupta
So we are not complicating anything. We are keeping very simple. If you’re given a loan to somebody, we need our money back along with interest on time and that is a message which we give it to our people and our customers time and again. Whenever there is any situation arises, the dealer or any borrower who is in genuine difficulty, their receivables are stuck, their inventory is not moving. So we work with them along with the anchor. So there’s only not one person, the lender who need to knock the door of the borrower. There are two people now.
And it does not only impact me in terms of the bad loan book. It does impact the anchor also because in that particular territory if a dealer is not paying me, the dealer will not get the fresh goods. The dealer does not get fresh goods, it impacts dealer. It also impacts the anchor because anchor is virtually not able to generate sales from that particular territory where the dealer was operating. So it is in the best interest of all the three entities, the lender, the dealer and the anchor to come together and find a solution.
Abhi Jain
Okay. Okay.
Vinay Gupta
So that is that simple as —
Abhi Jain
Okay. Sir, also I wanted — I mean like differentiation like what percentage is in export or something like in domestic is there anything, any number? Like because recently there has been this war impact. And so I wanted to understand like basically things are improving now but if anything goes wrong?
Vinay Gupta
No, I understand your concern. So two things. Number one, our entire AUM business is 100% domestic. We are not doing any import, export business. We are not financing that, right? Our entire book is only domestic. However, we are very, very conservative, vigilant. We have done our own prognosis of assessment of the situation in terms of borrower. Whether this has any indirect impact on the borrowers. But as of — as we speak today on this call there’s nothing which is there in my side which is impacting them severely that I need to be worried.
Mehul Panjwani
Okay. Okay. Thank you, sir. Thank you, sir and all the best.
Vinay Gupta
Thank you so much.
Operator
The next question comes from the line of Varun Gajaria with Omkara Capital. Please go ahead.
Varun Gajaria
Hi, sir. And thank you for taking my question. Am I audible?
Vinay Gupta
Yes, sir. Audible. Please go ahead.
Varun Gajaria
Until I think second quarter means to draw, we should draw the ROA tree for us. But we stopped doing that since the third quarter. If you could just draw an ROA tree for especially this quarter?
Vinay Gupta
We can do so. But out of 4.8% if our NI percentage roughly would be what 7.7%, cost to income is around 15% and our return on asset is 4.8%. So I think this totally is the composition of ROA.
Varun Gajaria
Okay. So since I think the last year our ROA had kind of shrunk by around 100 bps a little more. So if you could shed some light on that as to why that happened?
Vinay Gupta
Our leverage was virtually zero for six months in last financial year which is why the ROA appears very high. But on the absolute terms, if you look at the profitability, the net interest income, the PBT, everything has gone up. Our interest cost is low because for around four to five months our borrowing was zero and we were only doing business purely versus equity. So although the ROA may appear at 5.8% or 5.9% which we are alluding to, but return on equity would have massively gone down because the leverage was virtually zero.
Varun Gajaria
Okay. And what would be our leverage level now and what would be a comfortable range?
Vinay Gupta
So currently our leverage is 1.9 broadly let’s say 2x and our comfortable range is 2x. But our aspiration is to go up to 3x over the next two to three years.
Varun Gajaria
Okay. And our forward targets remain in line set as we had stated.
Vinay Gupta
Yes. 25% to 30% CAGR is remain our guidance for the AUM growth.
Varun Gajaria
Okay. And just alluding back to question that one of the earlier participants had asked what would be, I mean what would be the size for one of the like bigger players in this space? And who would be your like prime competitors? What would be the AUM size for the biggest players in the space for the bigger players? Considering that you said that this is kind of an untapped space, we are still getting into it. It’s still a developing story, right? So —
Vinay Gupta
Broadly, five, six large NBFCs and banks, each one should be dealing with INR10,000 crore to INR15,000 crore kind of a AUM in a supply chain space. So this is my market insight. But the overall market, if I were to add PSU banks, everybody, I think the market size would be somewhere upward of INR1 lakh crore.
Varun Gajaria
Okay. Okay. Thank you and all the best.
Operator
Thank you. The next question comes from the line of Rajat with Yashwi Securities. Please go ahead.
Rajat Agarwal
Thank you for the opportunity. So what will be our average AUM for the quarter?
Vinay Gupta
Sorry, I didn’t get that.
Rajat Agarwal
Sir, what will be our average AUM for the quarter?
Vinay Gupta
Average AUM [Indecipherable].
Rajat Agarwal
Okay. And sir, we are seeing a huge jump in fee income. So what is the reason for that?
Vinay Gupta
It’s just a focus on the fee income, nothing more.
Rajat Agarwal
Sir, but still INR6 crore fee income, average run rate was around INR1.5 crores and we are seeing INR6 crores in this quarter?
Vinay Gupta
No. So I will honestly accept the fact that we were not going little aggressive. The kind of fee income with the kind of potential is there. I think we were not going as aggressive as we could. So INR6.5 crore fee in Q4, it’s not an exception. I think this will become a norm. You will see in few quarters more.
Rajat Agarwal
No sir, I’m asking the reason for the delta which we are getting here. Sir, in Q3 it was INR1.5 crores. In Q4 last year it was INR1.89 crores. This quarter it is INR6.23 crores. So what is the reason for such a huge big increase?
Vinay Gupta
Well, I’m saying that is like in Q3 we have not able to generate that kind of fee which we could have or we should have. The only thing is that, okay, we as a business strategy we have focused. Okay. If there’s a potential to generate fee, why to leave that fee on the table? Ask the customer to pay fee. Customer will negotiate. And in the negotiation we will still end up earning something.
Rajat Agarwal
So what kind of fees are we getting on our disbursements?
Vinay Gupta
It ranges. It ranges from maybe INR0.10, INR0.20, INR0.25, INR0.50 also, few cases, maybe 1% also. It really depends upon the line.
Rajat Agarwal
Okay, sir. Thank you, sir.
Vinay Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Abhi Jain with AJ Capital. Please go ahead.
Abhi Jain
Hello. Am I audible?
Vinay Gupta
Yes. Yes, you’re audible, please.
Abhi Jain
Sorry. Sir, just one more question. Since you have taken over, obviously, you have done a good job of being conservative and that is much appreciated, especially when you’re in the financial space, right, I mean, I don’t understand management which are optimistic in the financial — in the NBFC space, especially. So kudos to you on being conservative. And if you overachieve at that time. I just want to understand all part of your guidances are conservative except for the provisioning and the credit cost side. So any reason? I mean would it help you to have some kind of buffer bend in there in your forward guidance? I mean, obviously, if you are targeting nil NPA and you are focused on that you might end up achieving it. But wouldn’t it — it wouldn’t hurt, right? Build and come back for the X. Because you yourself are conservative we are running the show [Indecipherable].
Vinay Gupta
No, but Abhi, we have accumulated a provision of INR18 crore in our balance sheet. If you look at our capital structure, because we follow the Indian accounting standard, we cannot deviate from that. From the expected credit loss theory. If there is nil NPA, we can only provide expected credit loss as per the Indian accounting standard over and of that whatever provision we need to make beyond the ECL as per accounting center, we need to go by the RBI guidelines. So there are well defined two regulations we need to follow. So I cannot — even if I have to create a buffer, I’m not allowed to create that buffer because regulator will not permit me.
Abhi Jain
No, I understand. On the provision side, I understand. I just wanted to understand in terms of the guidance of the NPAs. I mean because you’re conservative on all the other parameters, wouldn’t it help if there was some sort of buffer built in terms of the guidance on NPA also going forward. I understand. I mean the ambition is and you have been able to achieve NPA. But just thinking from [Indecipherable].
Vinay Gupta
I think it is only about the messaging. We are 78 people as SG Finserve. This presentation, this guidance is read by our people also. So our philosophy and theory is very simple. We don’t want to lose even INR1 in the market. So I don’t want to give any message that I’m okay tolerable to lose some money. By design, by target, we are not going to lose money. So the guidance will remain clear.
Abhi Jain
No appreciate that. And I think you are embarking on something which will not happen in the Indian financial industry space. So if you’re able to achieve it in the middle and the long term also [Indecipherable].
Vinay Gupta
No, no. I’m not living in any fool’s paradigm. I know lending business is a risk business. We may lose money, we will lose money. But I’m not targeting to lose money.
Abhi Jain
I appreciate that. Thank you sir.
Vinay Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Mehul Panjwani with 40 Cents. Please go ahead.
Mehul, your line has been unmuted. Please go ahead with your question.
Mehul Panjwani
Hello. Hello. Sorry, I was on mute. Sir, thank you so much for the follow-up. Sir, I had a question about our business model. While we’re expanding into earlier responses of another participant. You are saying that there’s an anchor and the anchor doesn’t want to lose the market, the sales kind of. So are you talking about — can you just please elaborate because I am new to the company. So with an example like what anchor is like the person the company’s products with the dealer is selling. Is that what you are alluding to?
Vinay Gupta
I’ll give you an example. I think that will be better for you to understand. Let’s say Tata Motors is the OEM manufacturing the vehicles and they are selling those vehicles through the dealers present across the country. Consumers like you and I will go to the dealer and buy that vehicle. Now there is a particular location where the dealer is present. For the OEM like Tata, it is extremely important that vehicle dealer remain open, well liquidity is available, well funding is available. And so that they continue to sell their vehicles to the dealer.
If tomorrow is the dealer were to go shut or by virtue of my legal agreement, the Tata is not allowed to sell the vehicles to the dealer, then what will happen? The Tata will lose the business catchment in that particular territory. The dealer will also lose the business. We will also lose the business. So it becomes more of a trap at night relationship between the OEM, the dealer and the financial. So what we do, we give a financing to the dealer saying, hey, take this money, pay to Tata to buy vehicles. Whenever you sell this vehicle in the market, get the money and pay it back to me. Once you pay it back to me, the more limit will make available again use that money and keep on doing that in cycles, again and again, again and again.
[Indecipherable] don’t pay me, then we have a clear agreement that the OEM will stop supplying any further vehicle to them till my overdues are clear. So this is the strength, this is the business model. I hope I [Speech Overlap].
Mehul Panjwani
Yeah, that was very well explained. Sir, one follow-up question on this one itself. So whenever we are in the agreement with our dealers or our clients, so always the anchor is included in that contract or how does it work around?
Vinay Gupta
Yes, yes. All the documents are executed, it’s well covered. And for the borrower, the borrowers and use is very, very clearly defined that you can use money. In my example, you can use this money only to pay to the OEM for buying the goods. So the goods are defined, from whom they can purchase is defined and how the process flow will happen because I know don’t give the money to give to them. I give money directly to the supplier.
Mehul Panjwani
Right. So sir, are you saying that each of our borrower — every borrower to whom we are giving lending money, we are having this kind of agreement where the OEM is involved, OEM or the anchor is involved?
Vinay Gupta
Not every borrower. Wherever we’re doing supply chain, typically refinancing, there are different structures. Refactoring — well of the factoring may have a different structure. Vendor finance may have a different structure. Purchasing financing may have a different structure. Similarly so every product has different nuances. I was only explaining to the core strength of a supply chain typical supply chain business, which is our strength and we are doing.
Mehul Panjwani
Right, right, right. Okay, sir. Thank you so much. This was amazing. Yeah. Thank you.
Vinay Gupta
Thank you.
Operator
The next question comes from the line of Manish, an individual investor. Please go ahead.
Manish
Yeah. Thanks for the opportunity again. Sir, I’m looking at your PPT Page #17 and the profit — sorry, the tax — the profit guidance that you have for the subsequent year, 30% to 35%. Now is that on the entire year’s profitability or is that on the exit run rate?
Vinay Gupta
No, you’re talking about the return on asset and return on equity?
Manish
No, no, no, I’m talking about the PAT guidance. On your PPT. Yeah, it says 30% to 35% CAGR, bad guidance.
Vinay Gupta
This is the growth on the PAT. This is not a — this is not a PAT percentage of the AUM. This is the growth on the PAT of previous year PAT.
Manish
Okay. All right. So it is not for the subsequent year because maybe I’m misreading it. The PPT says guidance. So that is why I thought this is the PAT for the subsequent year. The guidance for the subsequent year. That is not the case.
Vinay Gupta
No, no, this is the guidance for subsequent years. But you are saying. Okay, it is whether on the closing book. I’m not saying it is not. The PAT guidance is not of the closing book. The PAT guidance is on the PAT of the previous financial year. So when we’re saying, I can give an example, we’re saying [Speech Overlap]
Manish
Yeah, I understood, I understood. I understood. So I just wanted to kind of clarify, is it on the PAT of the previous financial year or is it on the exit run rate? Reason being the Q4 numbers were much better. So if this guidance is on the Q4 numbers, then obviously the PAT number would be much higher next year. So that was really. Yeah, understood. Yeah. Thank you.
Vinay Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Akhilesh Kumar [Phonetic], an individual investor. Please go ahead.
Akhilesh Kumar
Okay. I wanted to know like earlier quarter you gave me the breakup of top sectors where you are active right now and how in this quarter you are expecting them to perform, which is like earlier I think construction was at the top most. Can you elaborate little bit on that?
Vinay Gupta
So today, also the construction industry continues to be our number one in terms of the industry vehicle. Number two probably would be automotive and so on.
Akhilesh Kumar
And this mobile, I think the vendors, I think you started how they are in percentage wise?
Vinay Gupta
Mobile stand-alone would be maybe 2% of our AUM today.
Akhilesh Kumar
The construction sector is the highest one, maybe 30% you said last quarter?
Vinay Gupta
Around 30% you can say.
Akhilesh Kumar
Yeah. So we are not seeing any space [Speech Overlap]
Vinay Gupta
Not 30%. I think 35% would be our conception.
Akhilesh Kumar
Okay. You are not seeing any space in any of the top sectors where you are active right now in this quarter because of these so many events happening?
Vinay Gupta
No, we are not seeing any stress as of today. But we are not remaining no ignorance of the fact that there are can be a potential stress. So we are engaging our borrowers and anchors and we remain very, very vigilant.
Akhilesh Kumar
Okay. Because we will see reports about like say industries getting slowed down because of the availability of those fuel and gases and because maybe we are in steel as well, right?
Vinay Gupta
You’re right. But there is — I may have — if I may have a liberty to ask the proper a question. If the imports of the steel goes down, I think the industry in the Indian domestic manufacturers get tend to get benefit also. So it’s yet to see, the impact on the domestic business, domestic manufacturers, domestic distributors, the impact will be positive, negative, neutral. Things are evolving. Very difficult to know pinpoint today.
Akhilesh Kumar
Okay, thank you. That’s it from my side.
Vinay Gupta
Thank you so much.
Operator
Thank you. There are no further questions at this time. I would now like to hand the conference over to the management for closing comments.
Vinay Gupta
Thank you so much. First of all, thank you Emkay team for organizing this conference. Really happy to have all the investors asking questions.
As the SG Finserve, as your NBFC, we continue to remain a very conservative lender. So that is our philosophy. So that’s why our guidance on the NPAs continues to be nil. We would want to operate keeping finger close without incurring any delinquency. However, in the business momentum we will continue to write our incremental equity which we have raised in Q4. It is going to benefit us to maintain this momentum in Q1 and the subsequent quarters also.
On a medium- to long-term, our AUM growth guidance is 25% to 30%. But if I were to dissect it between FY ’27 and years further, I think 35% to 40% is the guidance which we are aspiring to achieve as a growth in FY ’27.
Profitability perspective, we continue to operate with the return on asset of 4.5% to 5% kind of a range with return on equity of 14% to 16% kind of a range and cost to income between 13% to 17% range. And that is the number which we are given as a budget to ourselves. And this is the guidance we are announcing into the inventors also.
Thank you so much. We look forward to interacting with you again in the Q1 result conference. Jai Hind.
Operator
[Operator Closing Remarks]