SKS Microfinance surged 9.98% to Rs 136.10 at 9:28 IST on BSE after the company received 'A' ratings from a leading rating agency for Rs 2000 crore of bank facilities.
The company made the announcement after market hours on Tuesday, 17 September 2013.
Meanwhile, the BSE Sensex was up 35.35 points, or 0.18%, to 19,839.38
On BSE, 1.37 lakh shares were traded in the counter compared with average volume of 1.72 lakh shares in the past one quarter.
The stock hit a high of Rs 138.30 and a low of Rs 127.80 so far during the day. The stock hit a 52-week high of Rs 198.90 on 13 December 2012. The stock hit a 52-week low of Rs 95.60 on 24 May 2013.
The stock had outperformed the market over the past one month till 17 September 2013, rising 8.17% compared with the Sensex's 6.48% rise. The scrip had also outperformed the market in past one quarter, gaining 14.16% as against Sensex's 2.47% rise.
The small-cap company has an equity capital of Rs 108.21 crore. Face value per share is Rs 10.
SKS Microfinance said that a leading rating agency has assigned 'A' rating for its long-term and 'A1' rating for its short-term bank facilities for an aggregate sum of Rs 2000 crore. According to the rating agency, instruments with 'A' rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk. Instruments with 'A1' rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk, SKS said.
According to media reports, strong ratings could help the company enhance credit availability and reduce cost of borrowings.
Mr. S. Dilli Raj, Chief Financial Officer, SKS Microfinance said, "The ratings would help to reduce the risk weights assigned to banks' exposure on SKS Microfinance from the present 100% to 50% in the case of long-term facilities and 30% for short-term facilities. The ratings are likely to enhance credit availability and reduce the cost of borrowing as they will free up capital allocation for banks in the case of SKS Microfinance's borrowings. We are unable to quantify the gains at this juncture, but expect the impact will be positive."
SKS Microfinance's borrowings as of 31 August 2013 stood at Rs 1675 crore.
SKS Microfinance said that the ratings are significant in view of the fact that the company has sustained and completed its turnaround in Q1 FY 2014 with three consecutive quarters of profit. During the Andhra Pradesh situation, the company had repaid Rs 5800 crore to the banking system without any rescheduling or deferral or haircut. As of 30 June 2013, the company had a capital adequacy ratio of 30% and cash and bank balance of Rs 310 crore. Collection efficiency of the non-Andhra Pradesh portfolio is at 99.8% in Q1 FY 2014, SKS said.
On 3 September 2013, SKS Microfinance's founder Vikram Akula sold his entire residual holding of 9.06 lakh shares in the company in the open market at Rs 132 each. Private equity firm Sequoia Capital India Growth Investments I also sold 15 lakh shares in the company at Rs 132 each on Tuesday.
Meanwhile, SKS Mutual Benefit Trust Medak bought 10.25 lakh shares of the company at an average price of Rs 130.79 on Tuesday.
As on 30 June 2013, Sequoia Capital India Growth Investments I held 41.12 lakh shares, or 3.80% stake in SKS Microfinance.
SKS Microfinance reported net profit of Rs 4.97 crore in Q1 June 2013, as against net loss of Rs 38.84 crore in Q1 June 2012. Operating income rose 68.8% to Rs 107.99 crore in Q1 June 2013 over Q1 June 2012.
SKS Microfinance is a non-banking finance company (NBFC), registered and regulated by the Reserve Bank of India, whose mission is to provide financial services to low-income households.
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