Event Participants
Executives
2 Venkatesh Krishnan (MD & CEO), Ashish Damani (CFO)
Analysts
11 Abhijit Tibrewal (Motilal Oswal), Amey Chheda (Banyan Capital), Ashlesh Sonje (Kotak Securities), Harshit Khadka (RoboCapital), Karthik Srinivas (Unifi Mutual Fund), Meghna Luthra (InCred Equities), Prabal Gandhi (InCred AMC), Rajiv Mehta (YES Securities), Sajal Raj (Zenflow Finance), Shreepal Doshi (Equirus Capital), Sucrit Patil (Eyesight Fintrade)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| AUM | ₹4,887 crores | 11% QoQ growth (vs 12% in Q4 FY26); growth driven by improved disbursements and new member additions |
| New member addition | 61% | Up from 46% in March quarter; 1.38 lakh members added vs ~1.1 lakh in Q4 FY26 |
| Borrowings raised (Q1) | ₹1,597 crores | Raised at favorable pricing; CGS portion ~₹200 crores utilized of ₹545 crores sanctioned |
| Marginal cost of borrowings | 11.3% | Down 70 bps QoQ from 12%; driven by CGS sanctions and improved rating |
| Overall cost of borrowings | 12.8% | Down 40 bps from 13.2%; bank share increased from 44% to 47% |
| Yield | 24.6% | Up 180 bps from 22.8% in Q4 FY26; driven by favorable mix and lower reversals, not rate hikes |
| NIM | 12.5% | Improved from 9.9% in Q4 FY26; aided by yield improvement and declining borrowing costs |
| X-bucket collection efficiency | 99.5% | Sustained at anticipated levels; positive bearing on all quality parameters |
| New book share | 91% | Portfolio originated under new SRO guidelines; expected to reach 95% next quarter |
| 1-90 dpd | 1.2% of AUM | Improved from 1.3% in March quarter |
| GNPA | 3.6% | Improved from 3.8% in Q4 FY26 |
| NNPA | 0.68% | Improved from 0.73% in March quarter |
| Provision Coverage Ratio | >80% | Continued strong provisioning on NPA book |
| Annualized credit cost | 2.1% | Down from 3.2% in March quarter; net credit cost negative in Q1 due to stronger recoveries |
| 90+ pool collections (Q1) | ₹51 crores | Includes NPL and write-off pool recoveries; ₹24 crores from written-off pool |
| PPOP | ₹16 crores (ex-recoveries); ₹40 crores (with recoveries) | Improvement clearly visible vs prior quarters |
| PAT | ₹12 crores | Up from ₹5 crores in Q4 FY26 |
| ROA | ~1% | Expected to improve through FY27; 3.5% target for FY28 BAU |
| Liquidity | ₹1,316 crores | Strong liquidity maintained as of June end; to be optimized as environment improves |
Geographic & Segment Commentary
Top 6 States (60% of portfolio): Madhya Pradesh, Bihar, Andhra Pradesh, Telangana, Odisha, West Bengal. State-wise collection efficiency: Andhra/Telangana at 99.2%, Bihar at 99.4%, Madhya Pradesh and Odisha above 99.5%, West Bengal at 99.4% — all broadly in line with 99.5% target.
Tamil Nadu Expansion: Current share just ₹16 crores vs industry of ₹38,000 crores. Strategic priority to grow this state significantly with new South CBO on board.
Maharashtra Expansion: Current book at ₹288 crores vs industry of ₹24,000 crores (1.1% share). Management targeting at least 2% share; branch expansion planned in both states this year.
Company-Specific & Strategic Commentary
Individual Loan Product: Ready for pilot in 8 branches in Madhya Pradesh with 8-10 dedicated staff. Better underwritten with eNACH facility; initially for existing customers, then migrating to new-to-Spandana customers with track record elsewhere. 3-month testing period for acceptability.
Branch Revival Task Force: 100 branches identified with scope for improvement in business or collections. Separate team created to revive these branches rather than merge/close — management believes merger/closure rarely succeeds in microfinance.
El Nino Preparedness: Proactive strategy developed by credit and business teams for new customers not exposed to credit, those in rented premises, etc. Game plan for select districts/states likely to be impacted; wait-and-watch approach with adequate controls.
New LOS Platform: Perfios platform migration from Jayam planned — UAT stage by end of Q1, migration of 1,250 branches in October-December. Includes inbuilt credit and collections platforms, skip tracing, customer observation recording.
Digital Collections Initiatives: Telecalling unit collecting ₹30+ lakhs monthly via QR codes from delinquent customers; targeting ₹50 lakhs. Bot calling services hired to increase customer reach (bots can make 80+ connects daily).
CGS Sanctions: ₹545 crores sanctioned under Credit Guarantee Scheme with more in pipeline; pricing at ~10% or slightly above. Rights issue balance of ₹200 crores (₹100 crores promoter + ₹100 crores others) expected before end of Q1 FY27.
SRO Discipline: Spandana + 3 exposure at just 3.7% vs 20-25% historically. 98% of new customers were regular with Spandana as sole borrower at loan origination.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Disbursements (FY27) | ₹6,000-6,500 crores | Management confident given improving liability access and CGS pipeline |
| AUM (March 2027 exit) | ~₹6,000+ crores | Based on sustained 11% QoQ growth trajectory |
| AUM (March 2028) | ~₹10,000 crores | Broad directional target; formal guidance to be provided Aug-Sep |
| Credit cost (FY27) | 2.5-3% gross; ~2% net | Gross target maintained; net closer to 2% including recoveries |
| ROA (FY28) | 3.5% | BAU target; current ROA at 1% with expected improvement through FY27 |
| Yield | ~25.25% | Disbursement yield at ideal level; marginal improvement expected then stabilization |
| New book share | 95% | Expected next quarter from current 91% |
| Opex (FY27) | ~₹675 crores | Down from ₹760+ crores last year; FY28 expected ~10% increase |
| Marginal cost of borrowings | Sustain/improve | CGS sanctions and PSU bank participation expected to drive further reduction |
| 90+ pool collections (FY27) | ₹150-200 crores | Current run-rate ₹16-18 crores/month; targeting ₹20 crores/month |
| Branch count | ~1,250 (standalone) | Stable; may increase with TN/Maharashtra expansion |
Risks & Constraints
| Risk | Context |
|---|---|
| El Nino / Monsoon Impact | Management acknowledged uncertainty around delayed monsoon and El Nino. Proactive measures taken for sourcing new customers in likely-impacted districts (new-to-credit, rented premises). July collection efficiency thus far in line with prior months; no adverse observations yet. |
| 90+ Pool Dependence | Large 90+ pool (~₹2,500 crores) still requires significant collection effort. This is the last year of focus on older 90+ book as customers will reach 2+ years vintage. Frontline officers juggle X-bucket, 1-90, and 90+ collections — potential distraction from new business. |
| Stage 1 Coverage Gap | Coverage on Stage 1 at only 40 bps vs industry at 1%+. Management acknowledges and working to raise bar to at least 50% in 1-30 segment. Potential provisioning impact if normalized to industry levels. |
| Liability Access Constraints | While improving, access to liabilities could impede growth targets. Mitigation: CGS sanctions, PSU bank participation increasing, bank share up from 44% to 47%. |
| Competitive Pressures | Borrower demand and competitive intensity in microfinance; management focused on retention of good customers and disciplined underwriting to maintain position. |
| Execution Risk on New Initiatives | Individual loan pilot, LOS platform migration (1,250 branches), TN/Maharashtra expansion all carry execution risk. Management has dedicated teams and phased rollout plans. |
Q&A Highlights
Credit Cost & ROA Targets
- Question: Are we still maintaining 2.5-3% credit cost target for FY27? (Harshit Khadka)
- Answer: Yes, very much. At 2.1% for Q1 with efforts to retain that. Net credit cost closer to 2% including recoveries. ROA target of 3.5% is for FY28 BAU; current at 1% with improvement expected through FY27. (Venkatesh Krishnan, Ashish Damani)
Liquidity Optimization
- Question: Will we reduce liquidity from ~₹1,300 crores as environment improves? (Karthik Srinivas)
- Answer: Yes, optimizing as situation improves, but microfinance requires staying liquid — "better to stay liquid than keep gasping for that." Some quarter-end timing effects on liquidity levels. (Ashish Damani)
Cost of Borrowing & Rating Impact
- Question: Has rating improvement translated into lower borrowing costs? (Sajal Raj)
- Answer: Incremental cost at 11.3% vs 12% last quarter; CGS helping keep costs lower. Overall cost at 12.8% vs 13.2% with further improvement expected. PSU banks entering should reduce acquisition cost. (Ashish Damani, Venkatesh Krishnan)
Liability Access & Disbursement Targets
- Question: Can liability access impede growth targets? What is disbursement target? (Abhijit Tibrewal)
- Answer: Of ₹1,597 crores drawn, only ₹200 crores was CGS — demonstrating availability outside CGS at good pricing. Disbursement target ₹6,000-6,500 crores for FY27. More banking names, including PSUs, in talks. (Ashish Damani, Venkatesh Krishnan)
Yield Trajectory
- Question: At what point will yields stabilize? (Abhijit Tibrewal)
- Answer: Ideal disbursement yield is ~25.25%; current levels very close. Marginal improvement expected, then stabilization. Last rate increase was October 2025; no further rate hikes planned. (Ashish Damani, Venkatesh Krishnan)
Branch Consolidation & Expansion
- Question: When does branch rundown conclude? What's the consolidation number? (Shreepal Doshi)
- Answer: ~1,250 standalone branches will remain; no further merger plans. Task force to revive 100 underperforming branches. Branch expansion in Maharashtra and Tamil Nadu this year; contiguous growth in existing large states. (Venkatesh Krishnan)
July Collections & El Nino Impact
- Question: Any El Nino impact visible in July collections? (Shreepal Doshi, Ashlesh Sonje)
- Answer: July thus far in line with prior months; no adverse observations. Proactive measures taken for likely-impacted districts. Portfolio holding up due to sourcing discipline, on-time repayment focus, follow-ups at 1-90 and 90+ levels. (Venkatesh Krishnan)
90+ Pool Recoveries & Credit Cost
- Question: Is ₹150-200 crores recovery target from NPL + write-off pool? How does this compare to cycle slippages? (Ashlesh Sonje, Rajiv Mehta)
- Answer: Yes, ₹51 crores in Q1 (₹24 crores from written-off pool). Target ₹150-200 crores for FY27 from existing 90+ pool of ~₹2,500 crores; ₹326 crores collected in last 18 months. Current run-rate ₹16-18 crores/month; ₹20 crores ambitious but worth targeting. (