Spandana Sphoorty share price: hit lower circuit post Q3 loss, brokerages cut target prices, Should you buy, sell or hold?
Spandana Sphoorty shares hit lower circuit after it reported a net loss of ₹394 crore for the quarter ended December 2024 as compared to a profit of ₹118.27 crore in the corresponding quarter previous year.
The company recorded a widened consolidated net loss of ₹440.19 crore in the quarter ended December 2024 as against net profit of ₹127.40 crore in the corresponding quarter previous year.
The board has approved raising of funds through qualified institutional placement (QIP) for an aggregate amount not exceeding ₹750 crore.
The assets under management (AUM) declined 14 per cent y-o-y to ₹8,936 crore from ₹10,404 crore in Q3 FY24, and disbursement plunged 43 per cent y-o-y to ₹1,443 crore.
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Stating that the microfinance sector has been experiencing challenges in the current financial year, Shalabh Saxena, CEO and Managing Director of the company, added in the earnings release, “Spandana has not been immune to the challenges. Like Q2FY25, Q3FY25 was challenging as more borrowers turned delinquent and the company deliberately slowed down disbursement to drive portfolio quality and center meeting discipline. The company provided a total of ₹666 crore towards impairment costs leading to a ₹440 crore reported loss for the quarter. A joint action by the industry through the implementation of guardrails will help improve discipline in the industry.”
Nuvama Institutional Equities observed sharp slowdown in disbursals and spike in opex to address attrition and beef up collections. “The MFI stress is likely to peak in Q1 FY26E,” Nuvama added. After sharp correction, the brokerage has maintained hold call on the stock given the elevated stress and low visibility. at a target price of ₹335 slashed from ₹520 earlier.
Domestic brokerage ICICI Securities stated that deteriorating asset quality due to borrower level overleverage and operation challenges (high attrition and external issues in select states) led to subdued earnings. The brokerage is positive about improvement in x-bucket collection and added that earnings would show sharp improvement Q1 FY26 onwards if it sustains in January 2025. ICICI Securities has maintained add call at a lowered target price of ₹375 from ₹500 earlier.
Shares of Spandana Sphoorty were locked in the lower circuit at ₹342.20 on the NSE, down by 5 per cent as at 12.35 pm.
On the BSE, the stock depreciated 4.99 per cent to ₹324.65
