Spandana Sphoorty Financial, a leading microfinance player in Mumbai, is optimistic about achieving its FY25 target of exceeding Rs 15,000 crore in Assets Under Management (AUM). By November, it had already surpassed Rs 10,000 crore, building on its AUM of Rs 9,784 crore in September, which marked a substantial increase from Rs 5,782 crore the previous year. Notably, the net income has surged to Rs 152 crore, nearly tripling from Rs 55 crore.
The Hyderabad-based company, with 48% ownership by Kedara Capital, faced challenges but transformed the new management led by CEO Shalabh Saxena from Bharat Financial in the middle of the last fiscal year when its AUM was at 6,270 crore. Over the years, the company has benefited from investments totaling close to Rs 630 crore from Kedara Capital.
Saxena outlined a three-year growth vision concluding in FY25, establishing a target of Rs 15,000 crore in Assets Under Management (AUM). The aim is to conclude the current fiscal year with an AUM of approximately Rs 12,000 crore.
“We are on course to meet the FY25 target of growing the AUM to Rs 15,000 crore as we have already crossed the Rs 10,000 crore AUM mark last month.
“Given this, we have just submitted an FY28 target, wherein we want to grow much larger with an AUM of Rs 28,000 crore, of which around Rs 25,000 crore should be our MFI book and the rest coming from our NBFC (Criss Financial Limited) book, which consists of loan against property and SME finding,” Saxena and the company’s chief financial officer Ashish Damani told reporters here Tuesday.
Regarding profitability, officials mentioned they have set a return on assets target of 4.5% by FY28, although they did not disclose the same for FY25.
Saxena stated that after the Reserve Bank tightened credit appraisal norms and core capital requirements for unsecured lending by 25 percentage points, the company’s loan application rejections exceeded 30% of total applications.
In the future, the company plans to adhere to the joint liability group model of lending and aims to increase weekly payments to 75% of all loans, up from the current around 50%, as highlighted by Saxena.
By September 2023, the company reported gross bad loans at 1.4% and net bad loans at 0.42%.
Spandana began as an NGO in 1998 in Guntur, then undivided Andhra Pradesh, and later transitioned into a Non-Banking Financial Company (NBFC) in 2004. In 2015, it further evolved into an NBFC-Microfinance Institution (MFI).