Spandana Sphoorty Financial Limited reported a turnaround in Q3 FY26 with positive PPOP and significant NIM expansion, driven by strong collection efficiency in its new loan book and increased disbursements. The company successfully raised substantial funding and is focusing on improving asset quality, particularly in its subsidiary, while planning strategic mergers and technology upgrades for sustainable growth.
vs Q4 FY26
| Metric | Value | YoY |
|---|---|---|
| AUM (post write-off) | ₹3.9K Cr | — |
| Disbursements | ₹1.2K Cr | — |
| New Book Collection Efficiency | 99.8% | — |
| Pan India Collection Efficiency | 99.3% | — |
| 1-90 DPD (as % of AUM) | 2.5% | — |
| Standalone GNPA | 2.6% | — |
| Metric | Latest | Trend |
|---|---|---|
| Net Interest Income (NII)(crores) | 113 | |
| Net Loss(crores) | -360 | |
| AUM(crores) | 4420 | |
| Disbursements(crores) | 1188 | |
| Standalone GNPA | 2.6% | |
| Standalone NNPA | 0.5% |
| Category | Headline | |
|---|---|---|
M&A | Criss Financial merger · announced · AUM ₹650 crores | |
Liquidity | Cash ₹1,626 crores At the end of December, the company had 1,626 crores of cash and bank balance which is very healthy. The company raised Rs. 1,684 crores during the quarter. |
| Category | Target | Priority |
|---|---|---|
| AUM | New book share of overall book→90% | High |
| AUM | Overall AUM→₹9,000-10,000 crores | Medium |
| Disbursements | Monthly disbursement run rate→₹500 crores, then ₹550-600 crores | Medium |
| Credit Cost | Credit cost (business as usual)→2.5-3% | High |
| Slippages | Net slippages→~₹50 crores | Medium |
| Profitability | Break-even (PPOP positive)→Break-even | High |
| Loan Officer Count | Stable loan officer count→4,800-5,500 | High |
| LAP Book | LAP book size→₹1,000 crores | Medium |
| # | Metric | |
|---|---|---|
| 01 | Break-even (PPOP positive) | |
| 02 | Criss Financial Merger Completion | |
| 03 | Loan Officer Count Stabilization | |
| 04 | LAP Book Growth | |
| 05 | New Book Share of AUM |
| Severity | Risk |
|---|---|
medium | High Rejection Rates in MFI Industry Rejection rates currently around 60% and may remain high for a few months due to past industry impacts. Analyst |
low | Management Attrition (Ground Level) Ground level attrition has been high but is expected to come down as business improves and focus shifts from recoveries to business. Analyst |
medium | Regulatory Scrutiny on Growth Regulators are not enthused with 25-30% growth in the segment, requiring the company to be watchful despite potential for higher growth. Management |
low | Credit Guarantee Scheme Applicability The CGFMU scheme may not be beneficial if the company's credit costs are already below 3%, requiring careful study for the next financial year. Management |
Spandana Sphoorty Financial Limited reported a significant turnaround in Q3 FY26, achieving positive PPOP of ₹8 crores compared to a loss of ₹40 crores in the prior quarter. This improvement was largely attributed to the strong performance of the new loan book, originated post-April 1, 2025, which now constitutes 58% of the overall book and boasts a 99.8% collection efficiency as of December. Disbursements saw a robust 27% sequential jump to ₹1,188 crores, indicating renewed business momentum.
The company's Net Interest Margin (NIM) expanded significantly to 11.1% in Q3 FY26 from 8.4% in Q2 FY26, despite a 40 basis points increase in borrowing costs to 12.6%. This was supported by an improved yield of 22.4% (up from 19.6% QoQ) as the higher-yielding new book replaced older assets. Asset quality also showed marked improvement, with standalone Gross NPA reducing to 2.6% from 4.97% and standalone Net NPA to 0.5%. The 1-90 DPD bucket decreased to 2.5% of AUM from 5.5% in the previous quarter.
Management outlined several strategic initiatives, including the proposed merger of its subsidiary Criss Financial, which holds a ₹650 crore book, with the parent company within the next 6-9 months to enhance operational efficiency. The company is also transitioning to a new LOS platform (Perfios) and plans to reduce non-productive branches from 1,500 to 1,250. A pilot launch of an individual loan product is also under consideration, aiming for a more diversified portfolio.
Spandana successfully raised ₹1,700 crores during Q3 FY26, a substantial increase from ₹160 crores in the previous quarter, reflecting strong lender confidence. The company maintains a healthy liquidity position with ₹1,626 crores in cash and bank balances at the end of December. Management expects bank funding to increase from the current 42% of borrowings to 60%, especially with the potential rollout of the credit guarantee scheme.
The company targets an AUM of ₹9,000-10,000 crores by FY28, with the new book expected to comprise 90% of the total AUM by the end of FY26. Management anticipates a business-as-usual credit cost of 2.5-3% in the future and projects net slippages of approximately ₹50 crores for FY27. The aggressive write-off approach (180 days plus) for ₹214 crores this quarter is expected to conclude, reverting to the policy of 455 days.
To enhance productivity, the company is aiming for a stable loan officer count of 4,800-5,500 within the next one to two quarters, with improved efficiency expected as 90+ collections are handled by a separate team. OPEX has seen a consistent reduction, from ₹884 crores two years ago to ₹790 crores last year, and further to ₹720 crores this year, with further scope for optimization. Management's immediate objective is to achieve break-even in the next quarter through a combination of revenue growth and cost/credit cost reduction.