SKS Microfinance gains after completion of a securitization transaction

SKS Microfinance rose 2.7% to Rs 131 at 10:34 IST on BSE after the company today, 30 September 2013, announced the conclusion of a securitization transaction for Rs 321 crore, rated A1+ (SO) by a leading rating agency, with a major public sector bank

The announcement was made before market hours today, 30 September 2013.

Meanwhile, the S&P BSE Sensex was down 236.13 points or 1.2% at 19,491.14.

On BSE, 56,000 shares were traded in the counter as against average daily volume of 2.66 lakh shares in the past one quarter.

The stock hit a high of Rs 132.45 and a low of Rs 124 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 27 September 2013, surging 16.8% compared with the Sensex's 9.79% rise. The scrip had also outperformed the market in the past one quarter, jumping 25.79% as against Sensex's 4.51% rise.

The small-cap company has equity capital of Rs 108.21 crore. Face value per share is Rs 10.

SKS Microfinance said that the transaction is possibly the first substantial securitization deal in FY 2014 in the microfinance sector.

Mr. S. Dilli Raj, Chief Financial Officer, SKS Microfinance said, "This fiscal we could complete the first securitization transaction in Q2 itself as against Q3 in FY 2013. The present transaction generates liquidity of Rs 321 crore for SKS Microfinance, and enables the company to extend micro loans to 4,75,000 rural women entrepreneurs. Notably, 29% of the pool is from loans extended to women entrepreneurs from Scheduled Castes and Scheduled Tribes, 17% from minorities, 37% from Backward Castes and the remaining 17% from women belonging to the other castes. The entire pool thus qualifies for weaker section treatment for the bank."

Another significant aspect to be noted is that the transaction further corroborates the fact that securitization is emerging as a meaningful financial inclusion tool, SKS said in a statement.

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. Total income rose 54.3% to Rs 122.61 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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