Spandana Sphoorty Q4 Review - Cost-Efficient Business Model To The Rescue: ICICI Securities
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ICICI Securities Report
Spandana Sphoorty Financial Ltd.’s Q4 FY21 performance was characterised by prudent approach in recognising stress (written off ~Rs 3.6 billion in FY21) and strengthening balance sheet as reflected in its total provision of ~Rs 4.1 billion (~6% of on-balance sheet loans).
Collections (excluding arrears) fell to 92% in April 2021 and 82% in May 2021 from 96% in March 2021.
While lower collections in near-term due to Covid-19 second wave pose risk to asset quality (expect credit loss of ~2-3% in FY22), we believe, the company’s cost-efficient business model will help it gain industry-leading profitability.
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