On March 25, 2025, shares of SG Finserve surged dramatically, hitting an upper circuit of 20% on the Bombay Stock Exchange (BSE) after prominent investor Madhusudan Murlidhar Kela acquired a substantial stake in the company. Coming from his recent activities in the Indian equity markets, Kela purchased 951,773 shares, which represented about 1.7% of SG Finserve for ₹33.3 crore, at a price of ₹350.01 per share during a bulk deal the day prior.
The impact of Kela's investment was immediate and significant, with SG Finserve shares trading at ₹432.65 as of late morning on March 25, a notable increase from their previous close of ₹360.55. This move is seen as a reflection of renewed investor confidence in the stock, particularly after a correction that had seen its price fall from a 52-week high of ₹546 back in September 2024 to a low of ₹308 only days earlier.
Dinesh Pareekh, another investor, also played a role in the day’s market activity by offloading 300,000 shares, which amounted to a 0.53% stake in the company, for ₹350 per share. The combination of Kela's purchase and Pareekh's sale illustrates the shifting dynamics of SG Finserve's shareholder structure, which is now seeing increased interest from prominent investors.
With a market capitalization now hovering around ₹2,352.34 crore, SG Finserve is making a name for itself in the competitive landscape of non-banking financial companies (NBFC) in India. Known for providing innovative business financing solutions to its channel partners, including dealers, distributors, retailers, and transporters, the company has been on a growth trajectory that caught the attention of Kela.
SG Finserve, originally established in 1994 and previously known as Moongipa Securities Limited, is a company under the APL Apollo group. In a notable strategic move in August 2021, the group's promoters, Rahul and Rohan Gupta, acquired a 56.25% stake in SG Finserve. Following this acquisition, a successful open offer took place, cementing their control over the company. As of October 2024, SG Finserve transitioned from holding a Type I NBFC license to a Type II license, allowing it a broader scope of operations.
A recent report from CRISIL Ratings underscores the company's positive standing; it has reaffirmed SG Finserve’s credit rating for its ₹1,000 crore bank loan facilities, upgrading it from a provisional to a final rating of AA (CE)/Positive. This development further affirms market optimism regarding SG Finserve's operational stability and future liquidity.
The recent software and operational efficiencies have boosted SG Finserve’s performance metrics significantly. The company showcased impressive growth, with a net profit of ₹23.69 crore reported in the third quarter of FY25, substantially up from ₹14.12 crore in the previous quarter. Moreover, the revenue from operations increased to ₹42.49 crore, marking a notable quarter-on-quarter rise. As of the last reporting period in December 2024, SG Finserve's total loan book stood at ₹1,568 crore—a remarkable achievement given it reflects a 92% growth from previous quarters.
SG Finserve's upward trajectory is coupled with a focus on lending to major corporate clients. The company has established lucrative partnerships with notable sector players including Tata Group, Jindal, and Vedanta, among others, amounting to a cumulative program limit of approximately ₹50 billion. In an ongoing effort to maintain its financial integrity, SG Finserve has reported zero delinquencies since its inception, thanks to its rigorous credit management strategies.
The stock's relative strength index (RSI) on March 25 stood at 69, indicating a healthy sheen of investor interest without tipping into overbought territory. This sharp rise in stock price represents a recovery from recent lows, as the stock bounced back 40% from the 52-week low of ₹308 earlier in March.
Madhusudan Kela, often hailed as a savvy investor, has a reputation for targeting stocks that are undervalued or have significant upside potential. His decision to stake a claim in SG Finserve signals confidence not only in the company’s performance metrics but also in the broader market conditions for NBFCs. Having avoided the stock previously allows for a fresh entry at a pivotal moment in its growth cycle.
While investor enthusiasm is palpable, experts advise caution. As SG Finserve continues to expand its operations and increase its loan book—targeting ₹50 billion within the next two to three years—the importance of monitoring asset quality will be paramount. Stakeholders are encouraged to consider the company's underlying fundamentals, corporate governance, and the evolving landscape of financial regulations in their investment decisions.
Overall, the recent uptick in SG Finserve's shares following Kela’s investment is a testament to the dynamic interplay of market confidence and strategic corporate governance, positioning the company favorably amid shifts in the financial services sector. Investors and analysts alike will be keenly observing how this trajectory unfolds in the upcoming quarters.
