Spandana Sphoorty Financial Limited

Spandana Sphoorty reported a net loss of ₹1,035 crores for FY25, primarily due to higher provisions. The company's AUM declined 43% year-on-year to ₹6,819 crores, with disbursements also falling 48% year-on-year to ₹5,605 crores. Net Interest Income (NII) for FY25 was ₹1,228 crores, a 5% decrease from FY24, while Pre-Provision Operating Profit (PPOP) dropped 35% to ₹608 crores. The standalone GNPA increased to 4.85% at the end of FY25, up from 1.45% in FY24, and NNPA rose to 0.96% from 0.26%.

FY25 was marked by significant challenges for the microfinance industry, including increased borrower leverage, weakening of the JLG model, and socio-political influences. Spandana experienced higher stress and attrition at the field level, with attrition reaching 56% in the previous financial year. In response, the company reinforced control mechanisms, increased headcount for branch quality managers, and intensified internal audit frequencies. These measures led to an improvement in X-bucket collection efficiency to 98.6% (98.9% excluding Karnataka) in March 2025, up from 98% in December.

The company adopted stricter credit rules, including a 30-day DPD threshold for existing borrowers and a one-day threshold for new borrowers, going beyond regulatory guardrails. They also implemented household DPD checks and partnered with NPCI for Aadhaar-based e-KYC to enhance robustness. These initiatives enabled a gradual restart of onboarding new-to-credit borrowers, a segment halted since July last year. Recoveries from 90+ DPD and write-off pools amounted to ₹52 crores in Q4 FY25, contributing to a total of ₹96 crores for the full year.

Spandana maintained a strong liquidity position of over ₹2,000 crores at the end of March 2025, representing approximately 24% of its assets. The capital adequacy ratio stood at a healthy 37%, with gearing at 2.1x, providing ample headroom for future growth. The company secured shareholder approval in March for a capital raise of up to ₹750 crores, with a possible rights issue planned for Q2 FY26, which will include promoter participation.

For FY26, Spandana aims to improve operational efficiencies, targeting an increase in borrowers per loan officer from 228 to 340. Loan officer productivity is expected to rise from ₹0.6 crores to ₹1.1 crores per officer by the end of FY26. The company anticipates AUM growth of approximately 20% from the current base. Management expects profitability to improve and credit costs to stabilize from Q3 FY26 onwards, driven by reinforced credit rules and improved portfolio quality.

Following the resignation of Shalabh Saxena, the company is actively seeking a new Chief Executive Officer. The Board is undertaking a comprehensive search process, evaluating both internal and external candidates to identify a leader who aligns with the organization's long-term strategic priorities. Mr. Ashish Damani currently serves as Interim Chief Executive Officer, President, and Chief Financial Officer.