Are SG Finserve Ltd latest results good or bad?

SG Finserve Ltd's latest financial results for Q3 FY26 indicate a strong revenue trajectory, with net sales reaching ₹86.28 crores, reflecting a year-on-year growth of 103.06%. This impressive performance is complemented by a net profit of ₹32.47 crores, which represents a 37.06% increase compared to the same period last year. The company's operating profit before depreciation, interest, and tax (PBDIT) also showed significant growth, climbing to ₹79.62 crores, marking a year-on-year increase of 138.03%. The operating margin reached a record high of 92.28%, showcasing exceptional operational efficiency.
However, despite these positive operational metrics, there are notable concerns regarding the company's financial health. The debt-equity ratio has risen to 1.72 times, indicating increased leverage that may impact financial flexibility. Additionally, the return on equity (ROE) stands at 9.37%, which is perceived as low for a high-growth non-banking financial company (NBFC), raising questions about the sustainability of growth and capital efficiency.

The market's cautious stance is reflected in the company's recent adjustment in its evaluation, highlighting the balance between strong operational performance and the challenges posed by rising debt levels and subdued return ratios. The absence of detailed asset quality metrics further complicates the assessment of the loan portfolio's health, which is critical for an NBFC focused on supply chain financing.

Overall, while SG Finserve Ltd has demonstrated remarkable revenue and profit growth, the elevated leverage and low return on equity present significant challenges that warrant careful monitoring by investors.