Spandana Sphoorty plans to scale back operations in Kerala and Gujarat

Stock down 4.4 per cent on BSE; eyes 20 per cent AUM growth in FY26

Microfinance institution (MFI) Spandana Sphoorty Ltd, which suffered a loss of ₹1,035 crore in the financial year 2024-25 (FY25) after a profitable previous year, plans to scale back its operations in states like Kerala and Gujarat and grow cautiously in Maharashtra and Telangana to boost efficiencies.

 

For FY26, the company said it was taking a step back to build a sustainable business and rationalise presence to have an impact on operational expenditure and efficiencies. Some other states where it would reduce presence are Rajasthan and Tamil Nadu. While it would grow cautiously in Chhattisgarh and Uttar Pradesh. 

 

After a sharp reduction in disbursements and assets under management (AUM) in FY25, the MFI firm expects to grow disbursements as well as assets under management by 20 per cent year-on-year (Y-o-Y) basis in the current financial year (FY26), said Ashish Damani, interim chief executive, and chief financial officer in analyst call.

 

Its stock closed 4.38 per cent lower at 277.55 per share on BSE.  

 

The Hyderabad-based firm’s disbursements were down 48 per cent Y-o-Y to ₹5,605 crore and AUM shrunk by 43 per cent Y-o-Y to ₹6,819 crore in FY25 on the back of elevated stress and write-offs.

 

The MFI adopted a cautious disbursement approach as delinquencies increased during the year.

 

Multiple external headwinds, including borrower overleveraging, weakening of Joint Liability Group (JLG) model, deterioration in borrower discipline and socio-political influences had an impact on the industry in FY25, Spandana said in an analyst presentation.

 

Referring to capital raising plans, Damani said the company will possibly come up with a rights issue of equity shares in the second quarter of FY26 with promoter participation. The shareholders have given a nod in March 2025 to raise capital up to ₹750 crore. The company remains well-capitalised, with a Capital to Risk-Weighted Assets Ratio (CRAR) of 37.1 per cent and a conservative gearing of 2.1 times.

 

Higher credit cost due to an increase in delinquencies resulted in reported net loss of ₹1,035 crore FY25 as against net profit of ₹501 crore in FY24.