Shares of Spandana Sphoorty Financial Ltd. jumped over 6% on Tuesday to the highest in nearly two months after the company posted a strong operating performance in the fourth quarter of financial year 2024. The microfinance institution's net interest margin expanded 130 basis points sequentially to 14.6%, driven by a sharp growth of 15% in assets under management to Rs 11,973 crore, according to an exchange filing.
Spandana Q4 FY24 Earnings Highlights (Consolidated, QoQ)
Total income up 8% at Rs 710 crore.
Interest income up 22% at Rs 378 crore.
Net interest income up 13% at Rs 460 crore.
Operating profit up 11% at Rs 266 crore.
Profit after tax up 2% at Rs 129 crore.
ICICI Securities maintains a 'buy' rating and has cut the stock's target price to Rs 1,200 apiece from Rs 1,450 earlier. The brokerage factored in a transitory impact on over 1 days-past-due portfolio due to a shift in collection frequency to weekly from monthly. It also cited a change in the expected-credit-loss model leading to a one-time impact of Rs 160 million. This resulted in a sequential increase in credit cost to 3.4% vs 3%. "As a result, PAT remained flat QoQ."
"While we believe (the) management's long-term vision of building (a) sustainable and scalable model by shifting collection model from monthly to weekly is a step in the right direction, the same raises concern over medium-term credit-cost trajectory," it said.
Motilal Oswal also maintains a 'buy' rating and reduced the target price to Rs 1,075 apiece. "We estimate Spandana to deliver FY26 RoA/RoE of 4.4%/17%, aided by operating leverage resulting in decline in operating cost ratios, and decline in credit costs from FY25 onward."
On the NSE, Spandana's stock rose as much as 6.42% during the day to Rs 935.60 apiece, the highest since March 5. It was trading 1.3% higher at Rs 890.85 apiece, compared to a 0.43% decline in the benchmark Nifty 50 at 11:26 a.m.
The share price has fallen 21.1% on a year-to-date basis and 49% in the last 12 months. The total traded volume so far in the day stood at 4.79 times its 30-day average. The relative strength index was at 52.20.
Ten analysts tracking the company have a 'buy' rating on the stock, according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 34.1%.
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