SKS Microfinance's net profit jumped over 100 per cent to Rs 84 crore in the March quarter, while net interest income rose 73 per cent to Rs 195 crore. SKS Microfinance is India's second biggest microfinance lender by assets.
Domestic brokerage Religare said SKS Microfinance's Q4 earnings were in-line with estimates. "Business momentum was robust with asset under management/ disbursements spiraling up 84 per cent/63 per cent year-on-year in Q4," the brokerage said in a note.
SKS Microfinance's non-interest income grew 42 per cent on the back of robust loan processing fees.
SKS Microfinance's asset quality also improved in Q4, with net non-performing assets (as a percentage of total advances) falling by 6 basis points sequentially to 0.04 per cent.
Religare increased its earnings per share estimates for SKS Microfinance by around 11 per cent for FY17-FY18, on the back of strong loan disbursement growth.
However, the brokerage has a "sell" rating on SKS Microfinance with a target price of Rs 400, up from Rs 345 earlier.
"In our view, NBFCs with 100 per cent exposure to microfinance cannot grow perennially at high rates with low credit costs, especially when competition is set to intensify with the emergence of small banks," Religare said.
SKS Microfinance shares closed 1.05 per cent higher at Rs 601.85 apiece compared to 0.64 per cent gain in the broader Sensex.
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