Analysts positive on SKS as clarity emerges on capital availability

Firm seems to have restored investors' confidence, shares have gone up by more than 50% since July

SKS Microfinance, once the largest micro-lender in the country, is gaining its lost ground as regulatory environment in the microfinance sector is improving while most of its rivals are still struggling to put the house back in order.

SKS also appears to have restored investors' confidence as its shares increased by more than 50% since July, 2012. With clarity emerging on the availability of capital following the company's qualified institutional placement (QIP) brokerages are once again recommending their clients to buy SKS stock.

"After the Andhra crisis there were questions raised about SKS' survival. However, over the last six months the company has not only left the Andhra crisis behind it, but has also raised Rs 263 crore, which should enough to take care of its capital requirement for the next couple of years," Santosh Singh, analyst with Espirito Santo Securities, wrote in his note to clients today.

The brokerage has retained its 'buy' rating on the stock and expects SKS shares to touch Rs 144. It estimates over 30% growth in SKS' loan book for the next three years and sees collection efficiency improving in coming quarters. "We expect the company to start showing profits from the third of fourth quarter of this year," Singh said.

At 11:19 am, SKS shares were at Rs 121.25 on the National Stock Exchange (NSE), up 1.7% from previous close.