Spandana Sphoorty Financial Ltd (SPANDANA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Spandana Sphoorty Financial Limited Q2 and H1 FY '27 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company, as on date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Venkatesh Krishnan, MD and CEO, Spandana Sphoorty Financial Limited, for his opening remarks. Thank you, and over to you, sir.
Venkatesh Krishnan (Spandana Sphoorty Financial Limited): Spandana namaskar. Thank you all for joining the Q2 FY '27 performance update. A good quarter for the third time in a row after series of turbulent periods. The AUM managed to cross the 5,000 crores for the first time in recent quarters, showing a 10% growth over the previous quarter. We managed to add about 1.5 lakh new subscribers or consumers, which again showed a 10% increase over the previous quarter. The share of new to Spandana or new to credit customers was roughly 65% during the last quarter, showing a 4% growth over the previous quarter. Monthly opex was around the similar lines of 50 odd crores. The yield improved to 24.9%. Marginal cost of borrowing was 10.6%. Borrowing mix had about 57% share from banks. We managed to raise 1,427 crores of debt. Overall GNPA was 2.54%. Net was 1.5% with a PAT of 18 crores. We managed to garner 995 crores of funds under the CGS scheme, all of which has been utilized as I talk to you. The non-CGS borrowing was at 10.8. I said 10.6, that included the the CGS. Couple of new initiatives. The new LMS that I spoke of in the last quarter has got piloted, and we hope to complete the entire migration of our branches over the next couple of months. CRPL merger, which has been initiated, is progressing. We are awaiting the regulator nod, should happen over the next 3-4 months. we are strengthening our leadership team with a leaner structure in certain geographies to begin with. This is going to be a sort of a new structure, which is generally not prevalent in the industry, wherein we're trying to remove too many layers, but at the same time have some senior people at the top so that the supervision and manageability is much better than what it is generally on the ground. We've managed to raise 194 crores of second tranche of partly paid shares. No, thereby 97% of the subscribers who participated in the first tranche participated in the second tranche as well. So, all in all, as I said, you know, we are moving in the right direction, and hopefully, we should continue to remain steady. I'm sure there'll be a lot of doubts in the minds of people or articles that are floating around about El Nino. Yes, we have identified as reported in the press, Karnataka and Maharashtra are the two states wherein one could experience some stress. Fortunately, our book is about 600 crores in these two states put together, of which about 96% of the portfolio is in current status, 3% is in the GNPA. What we've done is in the state of Maharashtra, we have bifurcated the branches into various categories, risk categories, and we realized that out of the 127 odd branches that we have in Maharashtra, 18 branches are so-called critical branches, that is having special focus. So we've worked out certain strategies between policy and risk. What we are looking at is in some of the stressed-out branches or tough branches, we are, at this point in time, staying away from onboarding new-to-credit
Venkatesh Krishnan (Spandana Sphoorty Financial Limited): and making the norms for new to Spandana customers a little more stringent, and ensuring that the existing customers have repaid in time for a repeat loan. With that, let me hand it over to Ashish Damani, our CFO, for further financial details. Thank you.
Ashish Damani (Spandana Sphoorty Financial Limited): Spandana Namaskar, good evening to everyone, and thanks for joining the call. I'm sure you had some chance to, you know, go through the presentation which we have put up on the exchanges. I would like to just highlight the first page of the presentation. We have made a lot of efforts over last two years, focused on, you know, the four pillars so to say, to see improvement in the financial performance. I will cover one-by-one. Portfolio quality, we have strengthened our underwriting principles, we have strengthened our onboarding of process of the customer and resultantly today if we see you know the X bucket collection efficiency, which at a point in time was as low as 96.2 over last two years at a at a particular point in time, today is at 99.6%. The the delinquent bucket between 31 to 90 has also seen a huge improvement. It is at 0.4% compared to, you know, 9.8% at a at a point in time. Accordingly, GNPA has also seen a reduction from to 2.6% from, you know, the peak of 5%. The other aspect which we have focused on was on improving the productivity. We have been increasing our customer acquisition quarter after quarter. We were at 1.13 two quarters back. Last quarter, we did about 1.35 and this quarter, the second quarter of this financial year, we have done 1.5 lakh borrowers' acquisition. So, we've been strengthening this and resultantly, what we see is borrowers per branch has improved by 8%, borrowers per loan officer has seen a 15% increase, now we are at 211 borrowers per loan officer, and average MFI outstanding since we have started giving loans in in line with the market in terms of ticket sizes, today, we are at 45,000 compared to 22,000 in the past. One other area of focus was to reinforce the confidence with the supply side. What we have done is we have completed, like Venkat just mentioned, we have completed our partly paid rights issue, 400 crores was infused into the into the company, and resultantly, the debt raised over a period was 7,485 crores and the important aspect which is, you know, the cost of borrowings now is at 10.6%, which at a particular point, I mean, Q3 of last financial year it was at 13.2%. So, good amount of improvement is what we have seen. All this could not have been done without focusing on people. We have strengthened our leadership team, we have restructured the team on the ground and the field to improve both accountability and the execution. Net-net, these actions are now reflected in the company's financial performance. Yield has improved, sequential expansion in the NIM is seen, and reduction in opex to AUM ratio is also, you know, visible. Let me cover some of the highlights. During the quarter, the company has disbursed 1,481 crores, of which 54% was to the new customers. We have been focusing on reactivating the drop-out borrowers. About 11% of disbursement has gone to such borrowers where we have reactivated them, brought it back into our fold, and the balance 35% has gone to, you know, the existing customers who have met all the guardrail principles. Our AUM stood at 5,364 crores, which was a healthy 10% growth quarter-on-quarter. Portfolio
Ashish Damani (Spandana Sphoorty Financial Limited): end of June. GNPA has come down to 2.5 against 3.6. NNPA has reduced to 0.5 against 0.68%. We have maintained very healthy liquidity on the balance sheet. During the quarter, we have raised 1,622 crores and this included the CGS like Venky explained, 995 crores. We are maintaining a very strong liquidity position with a closing liquidity of 1,379 crores as of September 30th. Financial performance highlights: portfolio originated in FY '26 now contributes 96%. Sustained portfolio quality with the AUM mix you know, drive has driven the improvement in the yield. We are at 24.9%, up from 24.6% compared to Q1. Our marginal cost, like I have explained, is now at 10.6, which is a decline of 260 basis points since Q3 FY '26. NIM has improved to 13.6 compared to 12.5%, which is output of both improvement in the yield as well as reduction in the financial cost. PPoP is grew quarter-on-quarter to 52 crores, compared to 16 crores in Q1, including some write-backs. PPoP almost doubled to 79 crores in Q2 FY '27, if we have to, you know, look at it with write-backs, against the 40 crores, which was the number in quarter one. PAT resultantly was at 18 crores compared to 12 crores reported in quarter one. This has an impact of 7.9 crores pertaining to the DTA reversal. As you are all aware, we are going in for merger with the subsidiary, Criss Financial Limited, and before the appointed date, if there was any DTA has to will not be available to the merged entity and, accordingly, this 7.9 crores was reversed as a one-time impact. So standalone PAT increased to 35 crores if we have to, you know, look at it on a standalone basis compared to the 16 crores in in the Q1. With this, I have completed all the highlights. We may open the floor for any question and answers that are required.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets when asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Meet Sangoi with PL Capital. Please go ahead.
Meet Sangoi (PL Capital): Hi. Thanks for the opportunity. So just wanted to understand how are trends in the month of October, specifically collection efficiencies in the overall book, and also the drought and flood affected areas? That's my first question.
Venkatesh Krishnan (Spandana Sphoorty Financial Limited): So Meet, as on date, since we are towards the month end, the month has looked steady both in terms of business as also in terms of recovery. Yes, there has been efforts which have gone into recoveries in certain pockets of Maharashtra, which I said, but otherwise it still holds good for the month.
Meet Sangoi (PL Capital): Got it, and how is growth looking like given that you know, in certain regions as you mentioned we have curtailed new customers, how is the disbursement trend like? Are we hitting the 500 crore mark or have we pushed put the growth pedal sort of on hold for now?
Venkatesh Krishnan (Spandana Sphoorty Financial Limited): See growth, we are not putting it on any sort of a slow mode or a stop mode. It is just that we are a little more careful and ensuring that the checks and balances are a little more stringent, but yes, this month, as I said, in even in terms of disbursement and business, looks good.
Meet Sangoi (PL Capital): Got it. Thanks. And just one last thing. Karnataka, AP, Telangana, again, what's the month looking like in these three states?
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