Spandana Sphoorty shares roll 5% after Q3 loss; is it time to offer supply?

Shares of Spandana Sphoorty Financial Ltd struck their 5 percent reduced circuit restrictions in Friday’s profession after the MFI reported a widening of losses at Rs 440 crore in the December quarter compared to Rs 216.32 crore loss in the previous quarter, many thanks to a big write-off of Rs 680 crore, which was 8 percent of its property under monitoring (AUM). There was a sharp downturn in disbursals and spike in opex to attend to attrition and boost collections. The soothing variable, Nuvama claimed, is that the business preserved PCR of 80 percent and presented rigorous guardrails.

For the December quarter, credit score expense stood increased to a high 7.95 percent from 5.2 percent sequentially.

“We are cutting earnings sharply. The MFI stress is likely to peak in Q1FY26. The board has approved raising of confidence capital of Rs 750 crore with the promoters likely to participate. We are slashing the target price to Rs 335 or 0.8 times FY26 BV from Rs 520 or 0.9 times. Given elevated stress and low visibility, we maintain ‘HOLD’ after the sharp correction,” Nuvama claimed.

The supply dropped 5 percent to Rs 324.65. Spandana Sphoorty Financial has actually shed 54 percent of its market price in the previous 6 months and 70 percent in the previous one year.

The ahead move right into phase 3 and phase 2 was high at around Rs 600 crore. The business made a huge write-off of Rs 680 crore versus Rs 260 crore QoQ, resulting in a decrease in Gross phase 3 (GS3) QoQ. Gross phase 2 though stayed raised at 7.7 percent.

“Despite elevated stress, the company has maintained PCR of 80 per cent. Gross CE dipped to 92.4 per cent from 93.7 per cent QoQ. The current book net CE has, however, improved from 95.9 per cent in September to 97.8 per cent in December. If the improvement sustains, forward flows will reduce. The mix of Spandana +2 lenders is 20 per cent and Spandana +3 is 14 per cent. The company has introduced strict guardrails. They have stopped lending to new credit borrowers and have not given new loans to borrowers with 30+ DPD,” Nuvama claimed.

Spandana Sphoorty has actually taken steps to boost recuperation and CE. A total amount of 600 Customer Retention Associates have actually been released for recuperation from GNPA and written-off profile.

“The Field team is supported by tele-calling agents and data analytics. To boost CE, borrower-to-LO span has reduced from 315 to 249. Field team will have more time for pursuing Portfolio Quality. Focus on driving centre meeting regimen,” Nuvama claimed.