Spandana Sphoorty Reports Q2 FY26 Loss Amid Operational Improvements

Spandana Sphoorty Financial Limited has reported a net loss of Rs 249.00 crores for the second quarter of fiscal year 2026, despite showing signs of operational improvement. The microfinance institution, which has been working on rebuilding its portfolio, demonstrated progress in key areas while facing ongoing challenges.

Operational Highlights

The company's X-bucket collection efficiency, a crucial indicator of portfolio quality, improved to 98.7% in September from 97.9% in June. However, it slightly declined to 98.5% in October due to fewer working days and festive season impacts. This trend suggests a gradual stabilization in the company's core operations.

Disbursements saw a significant uptick, increasing to Rs 934.00 crores in Q2 from Rs 280.00 crores in Q1, indicating a revival in lending activities. The Assets Under Management (AUM) stood at Rs 4,088.00 crores at the end of the quarter.

Financial Performance

Despite operational improvements, Spandana Sphoorty's financial results reflect ongoing challenges:

Metric	Q2 FY26	Q1 FY26	Change
Net Loss	249.00	360.00	-30.8%
Revenue	239.50	304.10	-21.2%
Net Interest Income	91.00	-	-
Pre-Provision Operating Profit	-40.00	-	-

The company reported a Gross NPA of 5.62% at the enterprise level and 4.97% on a standalone basis. Net NPA stood at 1.17% for the enterprise and 0.97% standalone.

Liquidity and Funding

Spandana Sphoorty maintained a strong liquidity position with Rs 1,179.00 crores in cash and bank balances, representing 21% of total assets. The company successfully completed a rights issue raising Rs 200.00 crores and secured additional debt funding of Rs 598.00 crores over two months, bolstering its capital position.

Strategic Initiatives

As part of its operational rationalization efforts, the company closed or merged 101 branches during the first half of FY26. Management expects to achieve positive Pre-Provision Operating Profit in the coming quarters and projects a 20% AUM growth with 2.5-3% credit costs for FY27.

Outlook

While Spandana Sphoorty continues to face challenges, the improved collection efficiency and increased disbursements suggest a gradual recovery. The company's focus on rebuilding its loan book under new credit rules and maintaining a strong liquidity position may contribute to its turnaround efforts in the coming quarters.

Investors and stakeholders will be watching closely to see if the company can translate these operational improvements into positive financial results in the near future.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-2.51%	-2.04%	-6.90%	-9.76%	-36.51%	-53.52%

Spandana Sphoorty Financial Limited , a rural-focused microfinance lender, demonstrated signs of recovery in the second quarter, despite ongoing challenges in the microfinance sector. The company reported a significant increase in disbursements and improvements in collection efficiency, while still grappling with losses from its legacy portfolio.

Key Highlights

Disbursements surged to ₹934.00 crore in Q2, a 233% increase from ₹280.00 crore in Q1.
Assets Under Management (AUM) stood at ₹4,088.00 crore as of September 30.
Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) were at 4.97% and 0.97% respectively on a standalone basis.
The company reported a net loss of ₹249.00 crore for Q2.

Improved Operational Metrics

Spandana Sphoorty's X-bucket collection efficiency showed consistent improvement, reaching 98.7% for September, up from 97.9% in June. This trend indicates a gradual stabilization of the company's operations. Notably, about 28% of the portfolio, built under new stricter credit norms, is performing exceptionally well with only 0.1% delinquency at the end of September.

Financial Performance

The company's total income for Q2 was ₹239.00 crore, a 21% decline quarter-on-quarter. Net Interest Income also decreased by 20% to ₹91.00 crore. Despite these declines, the Pre-Provision Operating Profit (PPOP) remained flat at ₹(40.00) crore compared to Q1.

Strategic Measures

As a prudent measure, Spandana Sphoorty recognized technical write-offs amounting to ₹367.09 crore for Q2 and ₹947.67 crore for H1. These write-offs contributed to elevated credit costs and the reported loss for the quarter. The company remains focused on strengthening on-ground recovery initiatives.

Liquidity and Capital Position

Spandana Sphoorty maintains a comfortable liquidity position of ₹1,179.00 crore as of September 30. The company's Balance Sheet remains strong with a Capital Adequacy Ratio (CRAR) of 47.0% and a gearing ratio of 1.5x, positioning it favorably for future growth.

Management Commentary

Mr. Ashish Damani, Interim CEO, President and CFO, stated, "The trends developing in Q2 have been rather heartening after last 15 tumultuous months for microfinance industry. Our focused efforts have resulted in ₹48.00 crore recoveries during Q2. The positive trends during the quarter strengthened our confidence to deepen customer engagement, leading to a sequential increase in disbursements."

Outlook

While the company continues to face challenges from its legacy portfolio, the improved collection efficiency and strong performance of the new portfolio under stricter credit norms provide optimism for future growth. The recent macroeconomic indicators and bountiful rains across India suggest a positive trend in rural credit demand, which could benefit Spandana Sphoorty's operations in the coming quarters.

As the company navigates through this recovery phase, its strong capital position and liquidity buffer are expected to support its growth initiatives and operational resilience in the evolving microfinance landscape.