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    Spandana Sphoorty Financial Q1 FY27 earnings call

    SPANDANA
    Financial Services·24 Jul 2026
    Management Summary

    Spandana Sphoorty Financial Limited reported a strong Q1 FY27, with AUM growing 11% QoQ to ₹4,887 crores and PAT reaching ₹12 crores. The company saw significant improvements in profitability, with NIM expanding to 12.5% and annualized credit cost reducing to 2.1%. Management highlighted efforts to optimize liquidity, expand in key states like Tamil Nadu and Maharashtra, and implement a new LOS platform to drive future growth and efficiency.

    Highlights

    5

    • AUM grew 11% quarter-on-quarter to ₹4,887 crores.

    • PAT was ₹12 crores, a significant improvement from ₹5 crores in the March '26 quarter.

    • Net Interest Margin (NIM) improved to 12.5% compared to 9.9% in the previous quarter.

    • Annualized credit cost came down to 2.1% from 3.2% in the March quarter, with net credit cost remaining negative due to stronger recoveries.

    • Marginal cost of funding decreased to 11.3% from 12% last quarter, and overall cost of borrowing came down to 12.8% from 13.2%.

    Key financials

    Single quarter

    10 metrics
    1. 01AUM₹4,887 Cr+11%QoQ
    2. 02PAT₹12 Cr+140%QoQ
    3. 03X-bucket Collection Efficiency99.5%
    4. 04Annualized Credit Cost2.1%-34.4%QoQ
    5. 05Marginal Cost of Funding11.3%-5.8%QoQ

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Cash ₹1,316 crores

    The balance rights issue money of ₹200 crores (₹100 crores from the promoter and the balance ₹100 crores from others who participated) is expected this quarter. The company raised ₹1,597 crores in Q1 FY27 at a favorable pricing of 11.3%.

    Guidance & targets

    13
    CategoryTargetPriority
    Credit Cost
    Annualized Credit Cost
    2.5% to 3%
    		High
    Credit Cost
    Net Credit Cost
    Closer to 2%
    		High
    Profitability
    ROA
    3.5%
    		High
    Profitability
    ROA
    Improvement from 1%
    		High
    Disbursements
    Business Disbursements
    ₹6,000 crores to ₹6,500 crores
    		High
    Collections
    90-plus Pool Collection
    ₹150 crores to ₹200 crores
    		High
    AUM
    AUM
    ₹6,000 crores
    		Medium
    AUM
    AUM
    ₹10,000 crores
    		High
    Operating Expenses
    Opex
    ₹675 crores
    		High
    Operating Expenses
    Opex Growth
    10% increase
    		High
    Cost of Borrowing
    Marginal Cost of Borrowings
    Further improvement
    		Medium
    Yield
    Yield
    Marginal improvement, then sustain
    		Medium
    Asset Quality
    Stage 1 Coverage
    50%
    		Medium

    What to watch in Q2 FY27

    5

    Individual loan product pilot success

    next 3 months
    CurrentPiloted in 8 branches in Madhya Pradesh
    TargetSuccessful pilot, ready for pan-India rollout

    Why it matters

    Success of this new product could diversify the portfolio and improve underwriting quality.

    Individual loan product is ready to be piloted in 8 branches in Madhya Pradesh. So we are putting about 8 -10 people. Over the next 3 months, we want to test it out because this is a completely different product, better underwritten with eNACH facility.

    Risks & concerns

    2
    RiskSeverity

    El Nino impact on credit and business

    Management has proactively developed strategies for new customers in potentially impacted districts and states, indicating awareness and preparedness. — Management acknowledged

    medium

    Borrower demand and competitive pressures

    Management is focusing on individual loan products, growth in specific states (TN, Maharashtra), attrition management, and LOS platform implementation to mitigate these risks. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “Very much. We are at, as I said, 2.1% for Q1 and the efforts are on to retain that.”

    Confirms the company's commitment to maintaining credit costs within the targeted range for the fiscal year.

    asked by Harshit Khadka

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY27 Performance and Profitability Improvement

    Spandana Sphoorty Financial Limited reported a robust Q1 FY27, with Assets Under Management (AUM) growing 11% quarter-on-quarter to ₹4,887 crores. Profit After Tax (PAT) significantly improved to ₹12 crores, up from ₹5 crores in the preceding March '26 quarter. The company's Net Interest Margin (NIM) expanded to 12.5% from 9.9% in the previous quarter, driven by a higher yield of 24.6% compared to 22.8% in Q4 FY26.

    02

    Enhanced Asset Quality and Reduced Credit Costs

    The company demonstrated improved asset quality, with annualized credit cost decreasing to 2.1% in Q1 FY27 from 3.2% in the March quarter. Net credit cost remained negative due to strong recoveries, including ₹51 crores collected from the 90-plus pool. Gross Non-Performing Assets (GNPA) improved to 3.6% from 3.8%, and consolidated NPA stood at 0.68% compared to 0.73% in the March quarter, with provisioning on NPA maintained at over 80%.

    03

    Optimized Funding Costs and Liquidity Position

    Spandana successfully reduced its marginal cost of funding to 11.3% in Q1 FY27 from 12% in the last quarter, and the overall cost of borrowing came down to 12.8% from 13.2%. The bank's share in borrowings increased to 47% from 44%. The company raised ₹1,597 crores in Q1 FY27 and garnered ₹545 crores under the credit guarantee scheme, utilizing ₹200 crores. Liquidity remained strong at ₹1,316 crores as of June end, with an additional ₹200 crores from the rights issue expected this quarter.

    04

    Strategic Growth and Market Expansion Initiatives

    The company aims for business disbursements of ₹6,000-6,500 crores this year and targets an AUM of ₹10,000 crores by March 2028. A key focus is on expanding market share in Tamil Nadu and Maharashtra, where current shares are low (0.04% and 1.1% respectively). An individual loan product is being piloted in 8 branches in Madhya Pradesh over the next three months, with plans for broader rollout based on its success.

    05

    Operational Efficiency and Technology Upgrades

    Spandana is prioritizing operational efficiency through technology upgrades, with a new Loan Origination System (LOS) platform expected to be in the User Acceptance Testing (UAT) stage by the end of Q1 FY27 and migration planned for October to December 2026. This platform aims to provide better customer insights and streamline operations. The company is also focusing on improving productivity in its 1,250 branches and managing attrition.

    06

    Proactive Risk Management and Collection Efforts

    Management is proactively addressing potential risks, such as the impact of El Nino, by structuring customer sourcing in potentially affected districts. Collection efficiency remains high at 99.5%, and the company is focused on maximizing recoveries from the 90-plus pool, targeting ₹150-200 crores for the year. The company also aims to increase its Stage 1 coverage to 50% in the 1 to 30 DPD segment.

    This is an AI-generated summary of a publicly available earnings call transcript.