Spandana Sphoorty Financial (Spandana) in Q2FY21 continued its proactive approach in strengthening its balance sheet by building additional Covid-related provisions at Rs 1.14 bn (~155bps of AuM), taking cumulative contingency buffer to ~450bps (highest in MFI space). Notably, collection efficiency improved steadily to as high as 93% in October with customer activation remaining robust at ~94%. Collections in states like Maharashtra, Odisha and Chhattisgarh remained lower than the average due to lockdown and a few instances of political interference.
While the ~6% inactive customer base poses near-term risk, we believe it will navigate through current cycle relatively better than peers due to: (i) diversified operations with 95% of districts having <1% exposure per district; (ii) provisioning buffer at Rs 3.3 bn (4.5% of AuM); and (iii) comfortable capital position (CAR 45%). Maintain Buy with a revised TP of Rs 900 (earlier: Rs 740).
Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.
The Outlooker is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.