Courtesy: https://www.chittorgarh.com/
Review By Dilip Davda on July 30, 2025
- The company is a rural focused NBFC-MFI having its operations in 426 districts.
• Following some technicality, it suffered a whopping loss of Rs. 1378.80 cr. for FY25.
• The sudden losses brought down its NAV and boosted its NPAs.
• Based on last two fiscal’s data, the issue is aggressively priced.
• There is no harm in skipping this “High Risk/Low Return” pricey bet.
ABOUT COMPANY:
Spandana Sphoorty Financial Ltd. (SSFL) is a rural focused NBFC-MFI with a geographically diversified presence in India. It offers income generation loans under the joint liability group model, predominantly to women from low-income households in Rural Areas. The company was incorporated as a public company in 2003 and registered as an NBFC with the RBI in 2004. Subsequently, it registered as an NBFC-MFI in 2015. Through its extensive corporate history, SSFL has developed an in-depth understanding of the borrowing requirements of the low-income client segment. In addition, its Subsidiary, Criss Financial Limited, registered as a non-deposit accepting non-banking financial company with the RBI, is engaged in the business of finance by providing individual loans, small business loans, loans against property.
As of March 31, 2025, SSFL had 16454 employees (including 10909 loan officers) operating out of 1628 branches in 414 districts across 19 states and 1 union territory in India. On a consolidated basis, as of March 31, 2025, it had 18382 employees (including 11994 loan officers) operating out of 1804 branches in 426 districts across 19 states and 1 union territory in India. The company operates across four business segments (including through its subsidiary Criss Financial Limited): (i) Joint liability group-based microfinance; (ii) Loan against property; (iii) Nano enterprise loans; and (iv) Individual loans.
Its business model involves regular client meetings through employees, who maintain contact with clients across the districts that it covers. Through its loan products and client-centric approach, it endeavors to strengthen the socio-economic well-being of low-income households by providing financing on a sustainable basis in order to improve livelihoods, establish identity and enhance self-esteem. Its operations are concentrated in the states of Odisha, Madhya Pradesh, Bihar, Andhra Pradesh and Karnataka, and any adverse developments in these states could have an adverse effect on its business, financial condition, results of operations and cash flows.
The company is facing 10 legal proceedings involving an amount of Rs. 62.68 cr., that remains major concern. During Fiscal 2025, it faced certain business and operational challenges due to a combination of external and structural headwinds. These included climatic disruptions, the weakening of the joint liability group lending model, deterioration in borrower discipline, elevated levels of borrower indebtedness, and external socio-political influences affecting customer behavior. These factors, which persisted through Fiscal 2025, significantly impacted field operations, disrupted centre meetings, and hindered the timely delivery of services to borrowers, including timely collections. Further, as a prudent and conservative accounting measure, it has recognized technical write-offs amounting to Rs. 1617.61 crores for Fiscal 2025. These accelerated write-offs also contributed to elevated credit costs and a loss for the year after taxes of Rs. 1035.16 crores for Fiscal 2025.
ISSUE DETAILS:
The company is issuing 17391304 Rights equity shares of Rs. 10 each at a fixed price of Rs. 230 per share to mobilize Rs. 400.00 cr. The RI opens for subscription on August 01, 2025, and will close on August 11, 2025. The company is offering RI in the ratio of 10 for 41 to its eligible stakeholders as of the record date of July 24, 2025. Post allotment, shares will be listed on BSE and NSE. The company is asking 50% (i.e., Rs. 115 per share) money on application for number of shares applied, and the rest by one or more subsequent calls from time to time as may be decided by the company. It is spending Rs. 4.36 cr. for this RI process, and from the net, it will utilize Rs. 380.00 cr. for augmenting its capital base and funding requirements for company’s business activities, and Rs. 15.64 cr. for general corporate purposes.
This RI is self-managed by the company itself, and KFin Technologies Ltd. is the registrar to the issue.
Post-RI, company’s current paid-up equity capital of Rs. 71.31 cr. will stand enhanced to Rs. 88.70 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2040.02 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted total revenue/net profit/- (loss) of Rs. 2510.78 cr. / Rs. 670.50 cr. (FY24), and Rs. 2424.09 cr. / Rs. – (1378.80) cr. (FY25). Its NAV declined to Rs. 369.27 per share as of March 31, 2025, against Rs. 511.20 per share as of March 31, 2024. Whooping losses for FY25 raises alarm. Its net NPA jumped to 1.19% for FY25 against 0.30% of FY24.
DIVIDEND POLICY:
The company has declared dividends at 25% for the last three fiscals. It has adopted a dividend policy based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 542759 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 407.20 on July 22, 2025, and opened on an ex-right basis at Rs. 360.65 on July 23, 2025. Since then, it has marked a high/low of Rs. 370.10 / Rs. 335.80. The scrip last closed at Rs. 346.35 as of July 29, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 497.68 / Rs. 217.75.
The promoters’ holding has been 57.97% for the last two quarters ended with June 30, 2025 and was 58.03% for quarter ended December 31, 2024. The counter is well managed above the RI price to lure investors.
Conclusion / Investment Strategy
SSFL is a rural focused NBFC-MFI having its operations in 426 districts. Following some technicality, it suffered a whopping loss of Rs. 1378.80 cr. for FY25. The sudden losses brought down its NAV and boosted its NPAs. Based on last two fiscal’s data, the issue is aggressively priced. There is no harm in skipping this “High Risk/Low Return” pricey bet.
Review By Dilip Davda on July 30, 2025
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
Courtesy: https://www.chittorgarh.com/
