Spandana Sphoorty shares gain 4% on plans to sell loans, stressed assets

Spandana Sphoorty Financial share price surged up to 3.82 per cent at Rs 615 per share intraday on the BSE. This came after the company approved the sale of stressed loan portfolio including written off loans pool with outstanding value of Rs 304.41 crore as on June 30, 2024 to an asset reconstruction company (ARC). 

This is pursuant to open bid method, for a consideration amounting to Rs 16.74 crore, on security receipts consideration basis, the non banking financial services firm said in an exchange filing on Monday. 

“The ARC has subscribed to 91.50 per cent of security receipts amounting to Rs. 15.32 crore whereas the company has subscribed to 8.50 per cent of security receipts amounting to Rs. 1.42 crore,” the filing said. 

Spandana Sphoorty Financial is a rural-focused non-banking financial company (NBFC) and microfinance lender (NBFC-MFI), operating with a diverse presence across India. The company provides income-generating loans through the joint liability group (JLG) model, primarily to women from low-income households in rural areas.

Established as an NGO in 1998 in Guntur, Spandana transitioned to an NBFC in 2004 and became an NBFC-MFI licenced by the Reserve Bank of India in 2015.

Spandana Sphoorty reported a major 53 per cent year-on-year (Y-o-Y) decline in its net profit for the June quarter (Q1FY25), at Rs 56 crore. The drop in profit was primarily attributed to increased credit costs. Sequentially, the net profit plummeted 57 per cent.

The company's asset quality also witnessed a downturn, influenced by seasonal factors, the general elections, and a severe heat wave. At the end of the quarter, the gross non-performing assets (GNPA) and net non-performing assets (NNPA) stood at 2.60 per cent and 0.53 per cent, respectively. In Q1FY24, these metrics were 1.63 per cent and 0.49 per cent. 

Spandana Sphoorty anticipates a return to normalcy in business operations by the second half of the fiscal year. Management described Q1FY25 as a particularly challenging period due to the extensive 7-phase general elections, extreme heat across the country, and higher attrition rates in certain regions, which impacted portfolio quality.

According to Bombay Stock Exchange (BSE), Spandana Sphoorty’s market capitalisation stands at Rs 4,269.75 crore.

At 12:17 PM, the company's shares were trading slightly higher by 0.89 per cent at Rs 620 per share, while the BSE Sensex was down marginally by 0.08 at 84,860 level.