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Spandana Sphoorty surges 11% on strong Q2 results

The stock rallied 11 per cent to Rs 1,212, its highest level since listing on August 19. It has appreciated 42 per cent against issue price of Rs 856 per share.

SI Reporter  |  Mumbai 

A new challenge for the microfinance industry?

Shares of Spandana Sphoorty Financial (SSFL) surged 11 per cent to Rs 1,212 on the BSE in the intra-day trade on Friday after the company reported a strong set of numbers for the September quarter (Q2FY20).

The stock of micro-finance company was trading at its highest level since listing on August 19, 2019. It has appreciated 42 per cent against issue price of Rs 856 per share.

In Q2FY20, SSFL reported 113 per cent year-on-year (YoY) growth in its normalised net profit at Rs 157 crore, on the back of strong operational performance. It had profit of Rs 74 crore in the year-ago quarter. The company’s profit before tax (PBT) grew 69 per cent to Rs 191 crore on YoY basis.

Net interest income grew 57 per cent YoY to Rs 243 crore from Rs 155 crore in previous year quarter. Net interest margin expanded by 204 basis points (bps) at 18.6 per cent from 16.2 per cent. Assets under management (AUM) rose 37 per cent YoY to Rs 5,407 crore from Rs 3,948 crore. The company’s gross non-performing assets (NPA) and net NPA ratio stood at 0.77 per cent and 0.09 per cent, respectively.

SSFL’s strong growth trajectory and frugal cost architecture is expected to be supported by its asset quality. SSFL’s GNPLs (excluding the fully-provided-for old AP portfolio) was at 0.1 per cent, as of FY19. Analysts at JM Financial expect SSFL to deliver robust RoA of 7.4/7.6 per cent in FY20-21E which translates to RoEs of 18/19 per cent.

“We expect SSFL to deliver a strong 36 per cent AUM CAGR over FY19-21E, which we largely attribute to the scaling up of branches/ticket sizes to full capacity. Unlike in the past, SSFL’s business is no longer concentrated in any single state: with MP and Orissa being the largest contributors (20 per cent of AUM each),” the brokerage firm said. It had initiated coverage on the company in September. The stock ,however, is trading above 12-month target price of Rs 1,100 per share.

At 01:16 pm, SSFL was trading 6 per cent higher at Rs 1,154 on the BSE, as compared to a 0.09 per cent decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 191,383 shares changing hands on the BSE and NSE so far

First Published: Fri, November 01 2019. 13:18 IST