Spandana Sphoorty soars 19% on heavy volumes; zooms 50% in 7 days

Kotak Institutional Equities said microfinance players are now starting to see a scenario where incremental data on forward flows, collections and SMA book is showing an improvement

Shares of Spandana Sphoorty Financial (SSFL) moved higher by 19 per cent to ₹322 on the BSE in Monday's intraday trade amid heavy volumes. In the past seven trading days, the stock price of the microfinance institution (MFI) has zoomed 50 per cent on hopes of improvement in business outlook. It had hit a 52-week low of ₹271.70 on April 7, 2025.

 

At 10:59 AM, Spandana Sphoorty shares were trading 17 per cent higher at ₹317.05, as compared to 1 per cent rise in the BSE Sensex. The average trading volume on the counter jumped 1.5 times with a combined 1.8 million equity shares changing hands on the NSE and BSE.

 

 

That said, despite the 50 per cent recovery from its 52-week low price, SSFL stock is still down 66 per cent from its 52-week high level of ₹935.15, which it touched on April 30, 2024. The stock had hit a record high of ₹1,400 on November 8, 2019.

 

Recovery in microfinance stocks

 

According to analysts at Kotak Institutional Equities, there was a significant deterioration in the asset quality for players who had microfinance in their portfolio over the past year.

 

"However, we are now starting to see a scenario where incremental data on forward flows, collections and Special Mention Accounts (SMA) book is showing an improvement," the brokerage said.

 

While there do exist a few risks to the recovery timeline (because of potential credit tightening due to 3-lender cap, for example), however, one can take comfort from the fact that the worst part of the cycle is behind and lenders' appetite to resume disbursements is improving.

 

"This can make the asset quality recovery theme a relatively simpler theme to play out over the next year," the brokerage firm said in a sector update report.

 

CARE Ratings reaffirms Spandana Sphoorty ratings

 

On April 4, 2025, SSFL informed the stock exchanges that CARE Ratings has reduced limits of Long Term Bank Facilities and reaffirmed the ratings for various instruments of the company.

 

Spandana Sphoorty's capitalisation profile remains comfortable with a capital adequacy ratio (CAR) of 36.0 per cent and gearing of 2.5 times as on December 31, 2024. Further, SSFL has sought approval from its board of directors and shareholders to raise confidence capital of up to ₹750 crore. However, the company is yet to finalise the details and timeline, CARE Ratings said in its rationale.

 

"While its growth is expected to remain moderate in the near term, the proposed capital raise will help in improving the loss absorbing cushion for the entity. Further, the company continues to maintain a healthy liquidity and has a diversified funding profile, although it has seen slight moderation with reduction in share of bank funding to 49.4 per cent in December 2024 from 55.7 per cent in March 2024," it added.

 

CARE Ratings expects the headwinds to continue and its profitability and asset quality to remain muted in the near term. Going forward, CARE Ratings anticipates loan book growth to remain moderate considering the ongoing MFI stress. Additionally, with rising credit costs expected to exert further pressure on profitability in the near team, the company's ability to maintain its financial flexibility in the current environment will remain key rating monitorable.

 

Motilal Oswal Financial Services on Spandana Sphoorty

 

According to Motilal Oswal Financial Services, SSPL is expected to see some more stress in its asset quality over the next couple of quarters; however, the management has highlighted early signs of recovery in December 2024 and January 2025, with normalisation expected by Q1/Q2FY26.

 

The brokerage firm maintained its 'Buy' rating on the stock with a share target price of ₹395 (based on 1x Sep’26E BV) after Q3FY25 results. Key downside risks are sustained asset quality stress in the loan book spilling into FY26 as well, and the inability to retain talent in the senior/middle management teams, similar to high attrition seen at the field officer and branch manager levels, analysts said.

 

About Spandana Sphoorty Financial

 

The company is engaged in undertaking microfinance loans business in India in a joint liability group (JLG) and loan against property (LAP) lending model. The company provides micro loans with a tenure of 1-2 years to women borrowers from low-income households for income generation activities like agriculture, handlooms & handicrafts, cattle rearing, cottage industries & micro entrepreneurial ventures like tailoring, grocery stores amongst others, education and healthcare.

 

The company has two subsidiaries, Caspian Financial Services Limited (CFSL) and Criss Financial Limited (CFL). As on December 31, 2024, the company operates in 19 states and 1 union territory with consolidated asset under management (AUM) of ₹8,936 crore.