Spandana Sphoorty Financial Limited has filed its monitoring agency report for the quarter ended December 31, 2025, with BSE and NSE. The report, prepared by CARE Ratings Limited, provides details on the utilization of proceeds from the company's rights issue under SEBI regulations.

Rights Issue Details and Proceeds Utilization

The company's rights issue was structured for Rs. 400 crore with an issue period from August 01, 2025 to March 31, 2027. However, the company actually received Rs. 199.35 crore, representing 50% of the total issue size, due to rejection of some invalid applications submitted by applicants.

Object-wise Fund Deployment

The monitoring report reveals complete utilization of the received proceeds across the stated objectives:

During Q3FY26, the company utilized Rs. 3.18 crore towards issue expenses, bringing total issue expense utilization to Rs. 4.33 crore against the estimated Rs. 4.36 crore. Notably, no amount was utilized during the quarter for the primary objective of capital base augmentation, as the company had already deployed Rs. 195.02 crore in previous quarters.

Monitoring Agency Assessment

CARE Ratings Limited reported no material deviations from the objectives stated in the offer document. The monitoring agency noted that Rs. 5.02 crore originally allocated for general corporate purposes was utilized towards the primary objective of augmenting capital base and meeting funding requirements.

The report highlighted that the company has been facing operational challenges, including:

• Significant decline in scale and deterioration in asset quality
• Reporting losses since Q2FY24 due to microfinance sector stress
• Breach of financial covenants affecting Rs. 306 crore of outstanding borrowings
• Waiver obtained for Rs. 219 crore of debt as of September 30, 2025

Company's Recovery Outlook

Despite the challenges, the company's Board of Directors noted improvement beginning in Q2FY26 that strengthened further in Q3FY26. The recovery is attributed to rising disbursement volumes and renewed borrower engagement, with collection efficiency in current buckets showing steady improvement. Loans originated in FY26 comprise 58% of the portfolio and demonstrate strong collection performance.

Regulatory Compliance

The monitoring report was submitted in compliance with Regulation 32(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and Regulation 82(2) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The report has been made available on the company's website at www.spandanasphoorty.com .

Spandana Sphoorty Financial Limited announced its unaudited financial results for the quarter ended December 31, 2025, reporting a standalone net loss of ₹82.54 crores. The microfinance institution continues to navigate challenges from previous years' loan portfolios while implementing recovery measures and maintaining strong capital adequacy ratios. During the earnings conference call held on January 27, 2026, newly appointed MD & CEO Venkatesh Krishnan outlined the company's recovery strategy and future growth plans.

Financial Performance Overview

The company's financial metrics for Q3FY26 reflect ongoing recovery efforts amid portfolio stress:

For the nine months ended December 31, 2025, the company reported a net loss of ₹629.52 crores compared to ₹546.54 crores in the corresponding period of the previous year. The company achieved PPOP positive results of ₹8 crores during the quarter compared to a loss of ₹40 crores in the previous quarter.

Portfolio Quality and Collection Performance

During the earnings call, management highlighted significant improvements in portfolio quality metrics. The new book sourced during the financial year, which constitutes 58% of the overall book, has demonstrated strong collection efficiency of 99.8%. Management expects this proportion to reach 90% by the end of the current financial year.

The company has established a dedicated team of 800 personnel for 90+ collections, which management plans to expand to 1,500 members and maintain at that level for the next couple of quarters.

Technical Write-offs and Portfolio Management

As a prudent and conservative measure, Spandana Sphoorty recognized technical write-offs with principal outstanding of ₹207.59 crores for Q3FY26 and ₹1,155.27 crores for the nine-month period. The selection of accounts for technical write-off was based on objective criteria identified by management as loss assets in line with the company's credit loss policy.

The company's cautious disbursement strategy resulted in a significant reduction of the loan book from ₹5,554.45 crores as of March 31, 2025, to ₹3,078.65 crores as of December 31, 2025. Despite the portfolio challenges, loans originated under enhanced credit guardrails have consistently delivered strong collection performance.

Capital Position and Liquidity

Spandana Sphoorty maintains a robust financial foundation despite operational challenges:

During Q3FY26, the company raised ₹1,644 crores through various funding sources. The liquidity position represents approximately 25% of the company's total assets, providing substantial buffer for operations and future growth requirements.

Leadership and Strategic Initiatives

The company appointed Mr. Ganesh KV as Chief Transformation Officer effective January 27, 2026. With over three decades of experience in financial services, microfinance, and retail banking, Ganesh has held senior leadership roles at Chaitanya India Fin Credit Private Limited, Dvara KGFS, HDFC Bank, and ICICI Bank.

MD & CEO Venkatesh Krishnan, who joined the company on November 27, 2025, outlined several strategic initiatives during the earnings call:

Regulatory Compliance and Future Outlook

The company's Qualifying Assets (QA) fell below the stipulated 60% threshold as of December 31, 2025, marking the first quarter post-implementation of the Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025. Management plans to effectively deploy available liquidity into business operations to increase QA to required levels within prescribed timelines.

For FY27, management expects gross slippages of approximately ₹225 crores and net slippages of around ₹50 crores, indicating a significant improvement in credit costs. The company targets monthly disbursements of ₹500 crores, gradually scaling to ₹550-600 crores, with an aim to achieve sustainable growth of 25-30% annually.

The Board of Directors granted in-principle approval for the proposed merger of Criss Financial Limited, a subsidiary, with the parent company. A Merger Steering Committee has been constituted to evaluate and finalize merger terms, subject to regulatory and shareholder approvals.

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