Tale of the Tape 

Good evening everyone!

Markets gave up all the gains after a sharp selloff in the final hour of trading. Midcaps were flat, while Smallcaps were up +0.3%. The advance-decline ratio was evenly split.

It was an even mix of red and green across sectors. Auto (+0.4%) and Pharma (+0.4%) saw the most buying. PSU Banks (-0.9%) and Metals (-0.8%) witnessed profit booking.

This small finance bank stock has solid upside potential according to Investec. Read our top story below to find out more.

Dreamfolks Services fell again after its airport lounge business was threatened. Meanwhile, Dmart’s Q1 biz update disappointed investors. More details below.

Nykaa fell -4% after 6 crore shares, 2.3% equity, changed hands in multiple block deals; reports said entrepreneur Harindarpal Banga was the likely seller.

PN Gadgil Jewellers was in focus after its board approved raising up to Rs 1,000 cr.

Arkade Developers (+4%) acquired land in Mumbai’s Goregaon West having an estimated Rs 3,000 cr revenue potential.

Punjab National Bank (-3%) was down after its Q1 biz update missed Street estimates. PS - the lender reported gross advance growth of +1.3% QoQ vs est Rs 2.1% QoQ.

Indogulf Cropsciences had a flat market debut. The stock ended Rs 111, unchanged compared to its IPO price.

Stock
Rising Star

SBFC Finance has been KILLING it lately! The stock is up +23 YTD, easily beating the Nifty Financial Services Index. Here’s all you need to know about the company.

About Company: SBFC Finance is a key player in the secured MSME lending space. Its bread-and-butter are MSME loans (83% of FY25 AUM), but it also has a gold loan segment (13%) to help with volatility. 

What’s worked so far: Micro lending -- aka lending to small entrepreneurs or mom & pop shops -- is the financing sector’s black sheep. Banks don't want to touch it because of its obvious risks. But what sets SBFC apart? They get rural households to register their land and take loans against properties. The company’s avg ticket size is ~Rs 10 lakh. This model requires greater operational costs; SBFC has 21 employees per branch vs industry avg of  ~11. But it has paid off, with the SBFC’s AUM growing at +40% CAGR over 2020-25 to hit Rs 8,747 cr in FY25.

What’s popping: Experts say there are two triggers at play. The first is the total addressable MSME loan market is huge. PwC estimates that only $170 billion out of the $530 billion debt demand is currently being handled by the formal sector. Even if nothing changes, Ambit Capital expects SBFC’s AUM to continue growing at a 25% CAGR over the next 3 years!

Secondly, SBFC Finance may roll out new products including affordable home and equipment financing. The former will require RBI approval, but there are a LOT of synergies at play if it works out. FYI - diversification is the only way to scale up. So keep a close eye on that.

Finally, what kinda potential rally are we looking at? Well, Investec has a target price of Rs 135 p/sh; +22% upside from current levels.

Stocktwits Specials
Exclusive Promoter Interview

Ellenbarrie Industries Gases Ltd just hit the market. We sat down with Varun Agarwal, Joint Managing Director of the company, to know about its operations, 5-year vision and more.