SPANDANA - Spandana Sphoorty Financial Limited Share Price

Management provided an optimistic outlook for Spandana Sphoorty Financial Limited, projecting a significant growth trajectory. Key highlights include an average monthly disbursement of INR 500 crores over the last quarter, up from INR 400 crores in Q3 and INR 300 crores in Q2. The company's Assets Under Management (AUM) reached INR 4,400 crores, reflecting a 12% quarter-on-quarter growth. The aim is to achieve an AUM of INR 6,500 crores by the end of FY27.

Forward-looking points include:

• The completion of a new Loan Operating System (LOS) by Perfios, expected to launch an individual loan product in June or July 2026. The group loan migration is anticipated by October-November 2026.
• A focus on customer satisfaction has led to an improved satisfaction score, rising from 22% in Q3 to 71% in Q4, with an aim for 95% by the end of the quarter.
• Cost of borrowing is expected to stabilize around 12.5%, while the yield rose to 22.8% from 22.4%.
• The advancement in collection efficiency has been notable, with X-bucket collection at an impressive 99.7% and GNPA down to 3.8% from 4.2%.
• Plans to add approximately 7 lakh new borrowers in FY27 to reach a total customer base of around 1.6 million, improving both portfolio quality and disbursement volume.
• Opex is targeted to decrease to about 7% to 8% of AUM over the medium term, indicating management's commitment to operational efficiency.

Overall, management is confident in Spandana's recovery and growth strategy, aiming to enhance profitability while adhering to prudent lending practices.

Q&A Section Extract

1. Question by Shreepal Doshi:
"Given the tight liquidity in the market, how are you seeing the cost of fund moving for us, especially, how do you see that cost of fund moving in FY27?"

Answer:
The cost of borrowings is expected to stabilize around 12.5% on a blended basis due to the prevailing liquidity crunch. We believe that as our business strengthens, this cost will not escalate significantly. Current loan pricing ranges from 23% to 26%, with a disbursement yield around 25.25%. The blended yield for FY27 should improve as we progress towards optimizing our book.

2. Question by Shreepal Doshi:
"What has been our new customer acquisition during Q4 and where do we see that customer base, you know, ending for FY27?"

Answer:
In Q4, we gained about 1.2 lakh new borrowers, a notable increase from the previous quarter's 63,000. By FY27's end, we aim to add another 7 lakh new borrowers, projecting our total to reach approximately 1.6 million from the current 1.1 million.

3. Question by Shreepal Doshi:
"Where do we see the FY27 loan book shaping up in terms of growth and profitability?"

Answer:
We plan to maintain disbursements at INR500 crores for the next few months and target to increase it to INR550-600 crores. We aim for an AUM of about INR6,500 crores by FY27 and, while we can't provide PAT guidance, our objective is to be profitable.

4. Question by Pratyush Dammani:
"What measures have led to the new portfolio yielding over 99% X-bucket?"

Answer:
We strictly adhere to the industry guardrails, such as limiting indebtedness. Additionally, we only disburse to customers showing proper repayment behavior. Our proactive collections process starts immediately post-default, allowing us to closely monitor recoveries, which has led to our high collection efficiency.

5. Question by Aviral Jain:
"What changes have you made regarding the scalability of the microfinance model?"

Answer:
Our model has evolved; we focus on digital repayments over traditional meeting centers. With 22% of our payments now digital, we aim to educate customers about digital payment advantages, moving away from reliance on cash collections.

6. Question by Rudraksh Raheja:
"What about the existing GNPAs in Criss Financial?"

Answer:
The GNPA has decreased from 11.45% to 6.5%. We've made significant improvements in collection efficiency, making our portfolio more manageable. Adjustments in underwriting practices are contributing positively.

7. Question by Rudraksh Raheja:
"Where do you see the individual loans portfolio heading?"

Answer:
We are launching a new individual loan product targeting working capital for existing enterprises, with ticket sizes between INR1 lakh to INR4 lakhs. We project it to be a profitable addition with a pilot rollout planned in the upcoming months.

8. Question by Rudraksh Raheja:
"Will you be implementing any measures in terms of borrower indebtedness for the individual loan product?"

Answer:
Yes, we will maintain the indebtedness cap within INR2 lakhs to ensure responsible lending. This product will mainly target borrowers who have visible enterprise operations with stable cash flows.

This concise format provides a clear representation of the questions asked and their corresponding answers from the earnings call.