SK Finance Limited is a Jaipur-based Non-Banking Finance Company (NBFC), founded in 1994 by Rajendra Kumar Setia. It operates in the Middle Layer category under RBI's Scale Based Regulations and specialises in vehicle financing (used commercial vehicles, cars, tractors, two-wheelers) and MSME lending targeted at rural and semi-urban India. With 535 branches across 12 states and over 10,700 employees, it has built a strong last-mile presence in underserved markets.
Total income for the year came in at ₹2,828 Cr, up from ₹2,386 Cr in FY2025 — a growth of about 18.5%. Interest income, the core revenue line, grew 15.8% to ₹2,456 Cr from ₹2,120 Cr. Fee and commission income showed strong momentum, jumping to ₹145 Cr from ₹97 Cr — a 50% jump, reflecting better cross-sell and assignment activity.
On the expense side, finance costs rose to ₹1,119 Cr from ₹971 Cr, tracking the growth in the loan book. Employee costs climbed to ₹590 Cr from ₹498 Cr. The big watch item was impairment on financial instruments, which came in at ₹326 Cr for the full year versus ₹239 Cr last year — a 36.5% increase, signalling some asset quality pressure.
Profit before tax stood at ₹567 Cr vs ₹485 Cr — growth of 17%. After tax, net profit for FY2026 was ₹431 Cr compared to ₹380 Cr in FY2025, a growth of 13.5%.
The loan book grew meaningfully to ₹13,830 Cr from ₹11,841 Cr — up 16.8% year-on-year. Total assets expanded to ₹17,152 Cr from ₹15,419 Cr. Net worth strengthened to ₹3,982 Cr from ₹3,502 Cr. Debt securities stood at ₹3,453 Cr and other borrowings at ₹9,367 Cr, giving total financial liabilities of ₹13,120 Cr.
Q4 FY2026 was a strong quarter. Profit for the quarter was ₹163 Cr versus ₹82 Cr in Q3 FY2026 — almost double sequentially. The big drag in Q3 was elevated impairment of ₹103 Cr, which normalised to ₹48 Cr in Q4. This recovery in the last quarter gives some comfort that the mid-year stress was transient.
Earnings per share (basic) came in at ₹32.08 for FY2026 versus ₹28.36 in FY2025. Return on Equity stood at 10.83%. The Capital to Risk-Weighted Assets Ratio (CRAR) was a healthy 25.41%, well above the regulatory requirement. The Liquidity Coverage Ratio was 167%, indicating a comfortable liquidity buffer.
On asset quality, Gross Stage 3 (under Ind AS) was 3.68% and Net Stage 3 was 2.26% with a Provision Coverage Ratio of 39.66%. Under RBI's stricter asset classification norms, Gross NPA was 4.34% and Net NPA was 2.83% with a coverage of 35.81%. These numbers are not alarming for a rural-focused NBFC but are higher than the best-in-class players.
The Debt-to-Equity ratio stood at 3.23x, and total debt to total assets was 0.75x — moderate leverage for an NBFC of this profile.
The current unlisted market price on UnlistedZone is ₹885 per share. With a book value of approximately ₹297 per share (net worth of ₹3,982 Cr divided by 13.4 crore shares), the stock is trading at a Price-to-Book ratio of roughly 2.98x, implying a market capitalisation of around ₹11,859 Cr.
For NBFCs, P/B is the most relevant valuation metric since their assets are predominantly financial in nature. Here is how SK Finance stacks up against peers in the listed space. Cholamandalam Finance trades at around 4 to 5x book. Five Star Business Finance, which operates in a similar segment, trades at roughly 3 to 3.5x. Aptus Value Housing is around 3x. Smaller or stressed NBFCs trade closer to 1.5 to 2x.
At 2.98x P/B, SK Finance is priced at a moderate discount to the better-rated listed peers, which on the surface seems fair. However, there is an important catch — unlisted shares typically deserve an additional liquidity discount of 15 to 25% compared to listed equivalents, because you cannot exit freely whenever you want. Adjusting for this, SK Finance at ₹885 is arguably priced in line with or slightly above where a comparable listed NBFC would trade.
In a bear scenario — where asset quality deteriorates further and the IPO remains shelved — a fair P/B of 1.8 to 2x would imply a price of ₹535 to ₹595 per share. In the base scenario, assuming the company continues its current trajectory with gradual ROE improvement, a P/B of 2.5 to 3x is reasonable, implying ₹743 to ₹891. In a bull scenario — where the IPO is relisted, ROE improves to 14 to 15%, and the market re-rates the stock — a P/B of 3.5 to 4x could take the price to ₹1,040 to ₹1,189 per share.
The company has built a genuinely differentiated franchise. Its focus on used vehicle financing in rural India is a niche that larger banks and well-capitalised NBFCs do not aggressively compete in. The loan book is growing at a healthy clip. Fee income is diversifying. The capital adequacy ratio at 25.41% gives significant headroom to grow without needing equity dilution in the near term. The liquidity coverage at 167% means no near-term funding stress. Management has a long track record — the founder has run this business for over 30 years.
The Q3 FY2026 blip — where profit dropped to ₹83 Cr from ₹142 Cr a year ago — was largely due to a spike in credit costs. While Q4 recovered, it raises questions about whether asset quality pressure was fully resolved or merely deferred. The Gross NPA of 4.34% under RBI norms needs to trend downward for a re-rating. The ROE of 10.83%, while decent, is not exceptional for a lending business of this risk profile — investors typically want to see 15%+ to justify a premium P/B. Most critically, the IPO was shelved in August 2025. For pre-IPO investors, the exit timeline has become uncertain, and without listing, the liquidity premium that drives unlisted valuations remains under pressure.
SK Finance is a solid, growing NBFC with a clear market niche and reasonable financial health. At ₹885 and a P/B of approximately 3x, it is neither a screaming buy nor an obvious sell. The current price bakes in a fair amount of optimism — continued loan book growth, stable asset quality, and an eventual IPO. If any of these assumptions play out slower than expected, there is limited margin of safety at this price.
For a patient investor with a two to three year view, a meaningful position makes sense only if the IPO roadmap becomes clearer. For someone looking at a shorter horizon or lower risk appetite, waiting for a price closer to ₹700 to ₹750 — which would represent a more comfortable 2.4 to 2.5x P/B with a proper liquidity discount — would offer a better risk-reward.
The business is real, the growth is real, but the price already reflects a fair bit of that story.
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investing in unlisted shares carries significant liquidity and regulatory risks. Please consult a SEBI-registered financial advisor before making any investment decisions.