SKS Microfinance jumps on turnaround in Q2

SKS Microfinance surged 4.06% to Rs 161.55 at 9:58 IST on BSE after the company reported net profit of Rs 16.34 crore in Q2 September 2013 as against net loss of Rs 262.15 crore in Q2 September 2012.

The Q2 result was announced after market hours on Wednesday, 23 October 2013.

Meanwhile, the S&P BSE Sensex was up 263.07 points or 1.27% at 21,030.95.

On BSE, 1.27 lakh shares were traded in the counter as against average daily volume of 2.89 lakh shares in the past one quarter.

The stock hit a high of Rs 164.20 and a low of Rs 159.90 so far during the day. The stock had hit a 52-week high of Rs 198.90 on 13 December 2012. The stock had 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 23 October 2013, surging 16.25% compared with the Sensex's 4.36% rise. The scrip had also outperformed the market in past one quarter, jumping 56.19% as against Sensex's 2.29% rise.

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

SKS Microfinance's total income from operations rose 67.54% to Rs 129.95 crore in Q2 September 2013 over Q2 September 2012.

The company's net interest income rose 7% to Rs 68 crore in Q2 September 2013 over Q1 June 2013 as loan disbursements registered an 18% QoQ growth (42% YoY growth). As a result, the non-Andhra Pradesh portfolio grew by 1.3% to Rs 2029 crore in Q2 September 2013 over Q1 June 2013 (48% YoY growth).

The company's draw downs surged 370% to Rs 1010 crore in Q2 September 2013 over Q1 June 2013 (Rs 405 crore in Q2 September 2012).

Mr. S. Dilli Raj, Chief Financial Officer, SKS Microfinance said. "Our fourth consecutive quarter of profit post our turnaround after an external event which resulted in seven quarters of losses, indicates that we are back on a stable growth path. We expect operational and financial leverage to fully play out in the near future".

Mr. M.R. Rao, Managing Director & CEO, SKS Microfinance said, "We are now in a position to fully address the credit requirements of our 33 lakh members across 14 states and are also looking at leveraging our rural distribution network to meet the other non-fund-based requirements of our members. Improving operating efficiency continues to be a focus area".

SKS Microfinance said that the entire net provisioning of Rs 4 crore in Q2 September 2013 is on standard assets. The company has voluntarily topped up the provisioning on securitized/ assigned/ managed portfolio to a minimum of 1% from 0.25%, it said.

The company said that the un-availed deferred tax benefit stands at Rs 574 crore and will be available to offset tax on future taxable income. Given the carried forward tax loss, no tax provision is required in Q2 September 2013, SKS Microfinance said.

SKS Microfinance had a networth of Rs 411 crore and capital adequacy of 31% as of 30 September 2013. Cash and bank balances stood at Rs 630 crore as on 30 September 2013.

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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