Spandana Sphoorty Financial Ltd Q4 FY25 Results

With the microfinance industry now implementing guardrails, the entire ecosystem is likely to become more credit disciplined which should lead to sustainable improvement across key metrices. Early signs of progress were evident at Spandana, with X-bucket collection efficiency (excluding Karnataka) improving to 98.9% in March 2025, compared to 98% in December 2024. Furthermore, recoveries from GNPA and written-off portfolios strengthened to 52 crore in Q4 FY25, up from ₹21 crore in Q3 FY25. The financial year, however, was marked by macro challenges of heat wave, disruptions due to elections, weakening borrower discipline and employee attrition which intensified challenges across the microfinance sector, including elevated delinquencies and rising credit costs. Spandana adopted a prudent approach by calibrating its disbursement strategy, leading to a 43% reduction in Assets Under Management (AUM), which stood at ₹6,819 Cr as of March 31, 2025. The heightened delinquencies contributed to elevated impairment cost and resulted in a net loss of ₹434 Cr for Q4FY25. Despite these headwinds, Spandana has been maintaining a PCR of ~80% and over ₹2,000 Cr in liquidity at the end of March-25. The company remains well-capitalized, with a Capital to Risk-Weighted Assets Ratio (CRAR) of 37.1% and a conservative gearing of 2.1x. The upcoming rights issue to raise capital will further enhance the growth capital which the company will deploy as market conditions improve. At Spandana we are confident that the experienced management team possess the strategic acumen and operational strength to steer the company into its next phase of growth, with a renewed focus on deepening engagement with its existing borrower base.