Microlender Spandana Sphoorty Financial on Monday reported a 79 per cent jump in net profit at Rs 127 crore in the October-December quarter of current fiscal on improved asset quality, loan growth and higher interest income. The Hyderabad-based lender said its income jumped to Rs 657 crore, up 75 per cent, in the quarter under review from Rs 375 crore registered during the same period of last fiscal.

Spandana Sphoorty Financial net profit jumps 79% to Rs 127 crore

Spandana Sphoorty Financial has suffered a net loss for the second consecutive quarter due to higher credit costs resulting in a breach of financial covenants in terms of borrowing agreements. The company has also missed the minimum 75% qualifying assets criteria as it slowed lending to the bottom of the pyramid customer segment amid intense asset quality stress and sought regulatory exemption from maintaining it till June 30 this year. The NBFC-MFI has breached certain financial covenants in respect of borrowings, resulting in these borrowings becoming repayable on demand subject to fulfilment of the terms of debenture trust deed.

Spandana Sphoorty Financial suffers 2nd quarterly loss, breaches borrowing covenants, regulatory norm

India Ratings downgraded Spandana Sphoorty’s rating from “A-” to “BBB+” citing weak profitability due to high credit costs and operating expenses. Despite a strong CAR of 46% in Aug 2025, asset quality remains stressed with GNPA at 5.49% and NNPA at 1.21%. Elevated borrower stress, staff attrition, collection transition issues, and external factors like elections and weather disruptions impacted performance. Business stabilisation is still in progress. Spandana slowed disbursements from Jan–May 2025, leading to franchise loss. Recovery is expected to be gradual in FY26, with growth driven by existing and new borrowers. AUM grew at 34.9% CAGR in FY22–FY24 but declined 43% YoY to ₹6,819 crore in FY25, and further to ₹4,958 crore in Q1 FY26.

India Ratings downgrades Spandana Sphoorty's debentures, loans to BBB+

Franchise recovery to be gradual in FY26. Internal controls need strengthening amid rising frauds. Leadership stability crucial post CEO exit.


Spandana raised ₹4,482 crore in FY25 but none in Q1 FY26 due to low disbursements. Borrowing costs rose to 11.9%-12.3%, higher than peers. Bank funding is 55% as of June 2025. Diversifying and lowering funding costs remains key. It has relationships with 23 banks, 25 FIs/NBFCs, 2 DFIs, and 1 foreign investor.



Microfinance faces socio-political, climatic, and operational risks. Geographic diversification, strong underwriting, and collections help manage these, while regulations ensure credit discipline and prevent over-indebtedness.


The issuer has made timely interest payments.

Venkatesh Krishnan, MD & CEO

As of June 2025, Spandana operated in 20 states with no single state contributing over 15% of AUM; the top 3 states made up 38.8%.  FY26 AUM is expected to grow ~15% through new borrower acquisition and cautious lending.


Spandana’s CRAR stood at 40.8% in Q1 FY26, supported by regular equity infusions and moderate leverage (2.6x). A ₹2,000 million rights issue in Aug 2025 boosted CRAR to ~46%. Ind-Ra expects leverage to remain below 4.0x.


Security Name: 10.75% Spandana Sphoorty Financial Limited 24 Mar 2025

ISIN: INE572J07646

YOUR EARNING

YOUR RISK

Repayment Priority

Security with Collateral?

LIQUIDITY INDICATOR #

ISSUER

Recent News

Related Videos

STEPS TO BUY THIS BOND

Information required for KYC

How to exit the investment?