ICRA Reaffirms Ratings for Sakthi Finance Ltd; Focus Remains on Retail Franchise and Capital Strength

ICRA Reaffirms Ratings for Sakthi Finance Ltd; Focus Remains on Retail Franchise and Capital Strength​

Sakthi Finance Ltd (SFL) has seen its credit ratings reaffirmed by ICRA Limited regarding its debt instruments, including Non-Convertible Debentures (NCDs), Fixed Deposits, and Banking Facilities. The ratings intimation was received on July 14, 2026.

The reaffirmation reflects SFL's established presence in the retail financing sector and its strong franchise, which has evolved over seven decades of operations. ICRA has maintained a Stable outlook for the company, based on modest near-term growth expectations.

Key Credit Ratings Overview​

ICRA confirmed the ratings across various instruments. For Non-Convertible Debentures (NCDs), both public and private issues maintain an [ICRA]BBB(Stable) rating. The Long Term/Short Term Fund Based Banking Facilities were rated [ICRA]BBB(Stable)/[ICRA]A2, also reaffirmed. Fixed Deposits continue to hold the [ICRA]BBB(Stable) rating.

The ratings reaffirmation considered SFL's adequate capitalization profile, noting a gearing of 5.4 times as of March 2026.

Credit Strengths and Operational Aspects​

SFL benefits from an established franchise and a significant track record in the regional market. The company operates across Tamil Nadu, Kerala, Puducherry, Andhra Pradesh, and Karnataka, specializing in the used commercial vehicle (CV) segment—which constitutes a large part of its portfolio. SFL has demonstrated capability by raising market borrowings through NCDs via public placement, having raised Rs 1190 crore over seven years (FY2019 to FY2026).

The company maintains a branch-centric operating model with in-house origination teams and utilizes a workflow management system across most branches for real-time monitoring of sourcing and collection activities. Furthermore, SFL's total capital adequacy stood at 20.45% (Tier I at 16.7%) as of March 2026.

Challenges and Financial Performance​

While the ratings are positive, ICRA noted several challenges facing SFL. The company's operations remain geographically concentrated, with Tamil Nadu and Kerala accounting for 95% of the total portfolio as of March 2026.

Profitability indicators have remained subdued historically. While SFL reported a net profit of Rs 17.2 crore in FY2026 on a managed asset base of Rs 1,459.4 crore, its profitability (PAT as a proportion of average total assets) averaged around 0.9% during FY2018 to FY2022 and 1.1% during FY2023 to FY2025.

Asset quality was noted as moderate. Gross Stage 3 (GS3) assets stood at 4.76% as of March 2026, a slight improvement from 4.92% in the previous year. The company's funding mix is heavily reliant on market borrowings and deposits, with loans from banks accounting for 8%.

Financial Indicators Snapshot (SFL Standalone)​

The table below provides key financial indicators for Sakthi Finance Ltd over FY2025 and FY2026:


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Credit Rating History Highlight:

The table below summarizes the rating status for key instruments as of July 14, 2026:

Stock Price Movement​

As of 13:31, Sakthi Finance Ltd shares are edging lower after seeing a -0.77% dip, currently priced at ₹28.35. The stock has moved within an intraday range spanning from a low of ₹28.25 to a high of ₹29.00.