SKS stock falls 8.77%

Shares of SKS Microfinance, the only-listed microfinance company, declined 8.77 per cent on Monday to Rs 603.85 at the Bombay Stock Exchange (BSE) from the previous close of Rs 661.9. It touched its all-time low of Rs 597 during the day.

Citigroup downgraded SKS to ‘sell’ from ‘hold’ on Thursday and cut its earnings estimates to factor in reduced lending rates, higher funding costs and lower growth.

The company had earlier said its collections were low after the Andhra Pradesh government issued an ordinance to regulate microfinance institutions (MFIs). The ordinance was replaced by an Act last week after the Assembly passed the MFI Bill.

It also said the reduction in collections in Andhra Pradesh was likely to have a material impact on revenues, profitability and the asset quality of the state portfolio. The stock had touched a high of Rs 1,490.7 on September 28, shortly after the company went public. In a recent announcement to BSE, SKS said as long as the MFI Bill was in accordance with the ordinance issued earlier, there would not be any change in the performance of the company.

It may be recalled that the Andhra Pradesh government recently had proposed an eight per cent cap on the interest rate spread charged by MFIs to the Malegam Committee.