What Caused Microfinance Firm Spandana Sphoorty to Report a Rs 434 Crore Loss in Q4?
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Synopsis
Spandana Sphoorty Financial Limited, a Hyderabad-based microfinance firm, has reported a staggering net loss of Rs 434.3 crore for Q4 FY25, highlighting the challenges faced in a tough economic environment. This article delves into the reasons behind the dramatic decline in revenue and asset quality.
Key Takeaways
- Spandana Sphoorty reported a net loss of Rs 434.3 crore in Q4 FY25.
- Revenue from operations dropped by 38%.
- Negative EBITDA of Rs 389 crore reported.
- AUM decreased by 43% YoY.
- Loan disbursements fell by 48% in FY25.
Mumbai, May 31 (NationPress) - The Hyderabad-based microfinance firm Spandana Sphoorty Financial Limited has recorded a net loss of Rs 434.3 crore year-on-year (YoY) for the fourth quarter ending March 31 (Q4 FY25). This marks a significant downturn compared to the same quarter last fiscal year (Q4 FY24), when the company reported a profit of Rs 128.6 crore, as outlined in its stock exchange filing.
The company's revenue from operations saw a dramatic decline of 38 percent, falling to Rs 414.8 crore in Q4 FY25 from Rs 669 crore in the corresponding period of the previous financial year.
At the operational level, Spandana faced a negative EBITDA of Rs 389 crore, in stark contrast to a profit of Rs 394.6 crore reported a year earlier.
The firm's business performance has been adversely affected by a difficult market environment. Consequently, the company adopted a cautious approach to lending, resulting in a significant decrease in activity.
Furthermore, its assets under management (AUM) dropped by 43 percent YoY, plummeting to Rs 6,819 crore from Rs 11,973 crore as of March 2024.
Loan disbursements for the entire year also experienced a sharp decline of 48 percent, totaling Rs 5,605 crore, according to regulatory filings.
The asset quality continued to decline, with the company’s gross non-performing assets (GNPA) rising to 5.63 percent in March 2025, up from 4.85 percent in December 2024.
Net NPA also increased to 1.19 percent from 0.98 percent. Nonetheless, Spandana maintained a robust provision coverage ratio (PCR) of approximately 80 percent, indicating strong provisions against bad loans.
Collection efficiency remained fragile, with gross collection efficiency in Q4 FY25 reported at 91.5 percent, slightly down from 92.4 percent in the preceding quarter (Q3 FY25).
Net collection efficiency remained nearly stable at 90.9 percent, as announced in the company’s filing.
Total income for FY25 decreased by 3 percent YoY, amounting to Rs 2,424 crore. Net interest income (NII) also fell by 5 percent to Rs 1,228 crore.
The yield on assets decreased by 173 basis points to 22.5 percent, while the cost of borrowings remained mostly stable at 12 percent.
Point of View
It is essential to recognize the broader implications of Spandana Sphoorty's financial struggles. The significant loss reflects a challenging landscape for microfinance institutions, urging a reevaluation of lending practices and risk management. The company’s cautious approach may serve as a lesson for others in the sector, emphasizing the need for sustainable business practices in a fluctuating market.
NationPress
22/07/2025
Frequently Asked Questions
What led to Spandana Sphoorty's loss in Q4 FY25?
The loss was primarily due to a cautious lending strategy and a challenging economic environment that significantly impacted revenue and asset quality.
How much did Spandana's revenue drop?
Spandana's revenue from operations fell by 38 percent, dropping to Rs 414.8 crore in Q4 FY25 from Rs 669 crore in the previous year.
What was the company's EBITDA in Q4 FY25?
Spandana reported a negative EBITDA of Rs 389 crore in Q4 FY25, a sharp decline from a profit of Rs 394.6 crore a year ago.
What is the current status of Spandana's asset quality?
As of March 2025, the gross non-performing assets (GNPA) increased to 5.63 percent, reflecting ongoing challenges in asset quality.
How has the loan disbursement changed for Spandana?
Loan disbursements for the full year fell sharply by 48 percent, totaling Rs 5,605 crore.
