Spandana Sphoort Q1 FY27 Earnings Call — Analysis (NSE: SPANDANA)
Spandana Q1FY27 PAT improves to ₹12 Cr on stronger recoveries and NIM expansion; AUM up 11% QoQ, management sets FY28 AUM target of ₹10,000 Cr.
The take
Q1FY27 PAT ₹12 Cr ( +140% QoQ ) . New guidance — FY27 fy27 disbursements ₹6,000 Cr to ₹6,500 Cr . New story: Turnaround momentum .
Results
AUM grew 11% QoQ to ₹4,887 Cr; PAT rose to ₹12 Cr from ₹5 Cr; NIM expanded to 12.5% from 9.9%; annualised credit cost fell to 2.1% from 3.2%.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| AUM | ₹4,887 Cr | +11% QoQ | qoq · Q1FY27 · vs Mar-26 |
| PAT | ₹12 Cr | +140% | qoq · Q1FY27 · ₹5 Cr in Q4FY26 |
| NIM | 12.5% | +260 bps | qoq · Q1FY27 · 9.9% in Q4FY26 |
| Annualised Credit Cost | 2.1% | -110 bps | qoq · Q1FY27 · 3.2% in Q4FY26 |
| Yield | 24.6% | +180 bps | qoq · Q1FY27 · 22.8% in Q4FY26 |
| Marginal Cost of Borrowing | 11.3% | -70 bps | qoq · Q1FY27 · 12.0% in Q4FY26 |
| Overall Cost of Borrowing | 12.8% | -40 bps | qoq · Q1FY27 · 13.2% in Q4FY26 |
| GNPA | 3.6% | -20 bps | qoq · Q1FY27 · 3.8% in Q4FY26 |
| Net NPA | 0.68% | -5 bps | qoq · Q1FY27 · 0.73% in Q4FY26 |
| PPOP (excl. recoveries) | ₹16 Cr | +na | point_in_time · Q1FY27 · Q1FY27 standalone |
| PPOP (incl. recoveries) | ₹40 Cr | +na | point_in_time · Q1FY27 · Q1FY27 standalone |
| X-bucket Collection Efficiency | 99.5% | +flat | sequential · Q1FY27 · vs prior quarters |
| New Book Share | 91% | +xx% | sequential · Q1FY27 · improving from previous quarters |
| Liquidity | ₹1,316 Cr | +na | point_in_time · Jun-26 · as of 30 Jun 2026 |
| CGS Sanctions Drawn in Q1 | ₹200 Cr | +na | point_in_time · Q1FY27 · part of total sanctions ₹545 Cr |
Guidance
FY28 AUM targeted at ~₹10,000 Cr, with FY27 exit >₹6,000 Cr and credit cost guided at 2.5–3% (net ~2%).
What management committed to
- FY27 total disbursements will be between ₹6,000 Cr and ₹6,500 Cr. — ₹6,000 crores to ₹6,500 crores, FY27
- AUM will exit FY27 at a little upwards of ₹6,000 Cr. — a little upwards of ₹6,000 crores, FY27
- AUM will reach around ₹10,000 Cr by March 2028. — INR10,000 crores or thereabouts, FY28
- Gross credit cost for FY27 will be in the range of 2.5–3.0%. — 2.5% to 3%, FY27
- Net credit cost for FY27 (including recoveries) will be closer to 2%. — closer to 2%, FY27
- FY27 total opex will be around ₹675 Cr. — around ₹675 crores, FY27
- FY28 opex will increase by about 10% over FY27. — just a 10% increase on that, FY28
- Recoveries from the existing 90+ pool (approx. ₹2,500 Cr) in FY27 will be ₹150–200 Cr, with efforts to exceed ₹200 Cr. — ₹150 crores to ₹200 crores, trying to see if we can collect a little more than ₹200 crores, FY27
- Marginal cost of borrowing will improve further from the current 11.3%. — FY27
- New book share (loans originated after 1 Apr 2025) will reach ~95% in the coming quarter (Q2FY27). — 95% or so, Q2FY27
- The company will not increase lending rates further (last increase 1 Oct 2025). — no further plans to increase the rates, FY27
- Spandana will open new branches in Tamil Nadu and Maharashtra during FY27. — some branches in Maharashtra and Tamil Nadu, for sure this year, FY27
Key themes
Turnaround gains traction with recovery-led profitability and calibrated growth.
How the narrative shifted
- Turnaround momentum: Management positioned Q1 as the quarter where the turnaround achieved self-sustaining momentum across AUM, collections, funding cost, and profitability.
- Calibrated, discipline-led growth: Growth will be deliberate with strict adherence to SRO guardrails and internal processes; no heroics, just basics around due-date collection and follow-up.
- Recovery windfall from legacy pool: Cash recoveries from the large 90+ pool are a material earnings bridge, with ₹150–200 Cr targeted for FY27, but old pool exhausts by FY28.
- Cost of funding improvement: Rating upgrade, CGS borrowings, and rising bank share (including prospective PSU lenders) are structurally lowering borrowing costs and widening NIMs.
- Geographic penetration in under-tapped states: Tamil Nadu and Maharashtra present a large addressable gap; branch additions and a new South business head to drive share from near-zero levels.
- El Niño / monsoon risk contingency: Proactive sourcing restrictions for new-to-credit customers in vulnerable districts; no visible stress yet, but wait-and-watch.
Operational commentary
- New book (originated after 1 Apr 2025) now 91% of portfolio, driving improvement in asset quality and net CE to 99.4%.
- Tamil Nadu and Maharashtra identified as key underpenetrated growth states; current share <2% of respective industry sizes, with branch additions planned in FY27.
- Individual loan product pilot launched in 8 branches in Madhya Pradesh, targeting existing customers initially, with aim to scale pan-India.
- Collection efficiency on X-bucket sustained at 99.5% as of July, with no early signs of monsoon-related stress; proactive sourcing curbs in vulnerable districts.
- 100 underperforming branches carved out for revival by a dedicated task force; no closures or mergers planned, retaining 1,250-branch network.
- New LOS platform migration (Perfios) on track for UAT by end of Q2FY27 and full rollout Oct–Dec 2026, aimed at enhancing credit and collections analytics.
- New Chief Business Officer for South appointed to drive growth in Andhra, Telangana, Tamil Nadu, Karnataka, and Kerala.
- Balance rights issue proceeds of ₹200 Cr (₹100 Cr promoter, ₹100 Cr others) expected in Q2FY27, bolstering capital.
- Bank borrowing share rose to 47%, with PSU banks expected to participate, aiding further reduction in cost of funds.
Analyst Q&A
Q. What is the gross and net credit cost guidance for FY27?
Gross credit cost remains 2.5–3%; net credit cost closer to 2% with recoveries.
Q. What are the AUM targets for FY27 exit and FY28?
FY27 exit a little upwards of ₹6,000 Cr; FY28 ~₹10,000 Cr or thereabouts.
Q. How are you ensuring this upcycle doesn't end in heavier consolidation again?
Focus on process, discipline, calibrated growth; strict adherence to SRO guardrails; 98% of new customers added are first-time borrowers with Spandana; telecalling and bot calling boosting collections.
Q. What are the top execution priorities over the next few quarters?
Four priorities: (1) individual loan pilot and pan-India scale-up, (2) expand in Tamil Nadu and Maharashtra, (3) reduce attrition and retain people, (4) migrate to new LOS platform (Perfios).
Q. Will you increase provision cover on Stage 1 to industry levels?
Working on raising the bar to at least 50% in the 1–30 day bucket over time; frontline officers currently stretched across X-bucket, 1–90, and 90-plus.
Q. How does Kedaara evaluate senior management performance – is it growth, profitability, or asset quality?
Kedaara has no role in deciding what to grow or how to grow; management decides everything; Kedaara is very supportive with no interference, only monthly reviews.
Q. Will liquidity be optimised by reducing the ₹1,316 Cr buffer?
As the environment improves, we will optimise liquidity, but in microfinance it's better to stay liquid than gasp for it.
Research and educational content only. Not investment advice.