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Analyst Meet / AGM
30-Oct-24
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Conference Call
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Spandana Sphoorty Financial
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Expects operations to normalize by end of FY25, AUM Growth to be above FY24 by end FY25
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Spandana Sphoorty Financial conducted a conference call on 29 October 2024 to discuss the financial results for the quarter ended September 2024. Shalabh Saxena, MD&CEO of the company addressed the call:
Highlights:
The company has exhibited 40% yoy 34% qoq decline in disbursements to Rs 1514 crore in Q2FY2025 reflecting a cautious approach in response to challenging market conditions.
Assets under Management (AUM) rose 8% yoy but declined 10% qoq to Rs 10537 crore end September 2024.
The company has recorded strong 22% growth in the customer base, despite challenges. However, the customer addition has moderated in Q2FY2025 due to focus on asset quality.
The GNPA ratio rose to 4.86%, while the NNPA ratio increased 46 bps qoq to 0.99% end September 2024.
The marginal cost of borrowings declined 46 bps yoy but increased 16 bps qoq to 11.4% in Q2FY2025. The borrowings for the quarter were at Rs 1584 crore in Q2FY2025.
Net Interest Income (NII) of the company rose 9% yoy, but declined 20% qoq to Rs 341 crore. The company has recorded a net loss of Rs 216 crore in Q2FY25 on account of high provisioning.
The yield on loan portfolio declined by 202 bps yoy and 197 bps qoq to 22.4%.
The company has implemented conservative lending policies and stopped on-boarding of new-to-credit borrowers to mitigate risks. The company has strengthened its controls, including enhanced KYC checks and additional fraud prevention measures.
It has created a separate quality assurance layer at branches to focus on process adherence and customer service.
The company has added additional employees to the collection team to raise collection efficiency.
The company expects operations to normalize by the end of FY25. The company expects the AUM Growth to be above FY24 by end FY25.
The company also engaged with the branch managers to understand and address their issues and retain them.
The company has decided not to be the fourth lender to new borrowers, despite industry guidelines allowing it.
The company expects the growth to be contributed by the existing customers, while the focus of the company is on stabilizing operations.
The capital adequacy ratio stood at 35.8% with gearing at 2.2x end September 2024.
The collection efficiency of the company declined sharply to 96.7% in Q2 from 100.5% in Q1FY25. The net collection efficiency fell to 94.2% from 98.1% in Q1FY25.
The subsidiary Criss Financial has reported steady growth in LAP and micro loans. AUM was at Rs 160 crore end September 2024.
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