Spandana Sphoorty rallies over 30% on Axis Bank take over buzz; what should investors do?

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26 Aug, 2025 12:21

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Spandana Sphoorty Financial share price rallied more than 30 percent in two consecutive sessions - June 3-4 - on reports that private sector lender Axis Bank may take over the microfinancier.

Last Thursday, the stock was locked at 20 percent upper circuit and the rally continued till Friday. However, it witnessed a bit of profit-booking, falling more than half a percent. In the last 12 months, the stock has rallied 35 percent.

On June 4, sources privy to the matter told Moneycontrol that the lender is looking at acquiring Spandana Sphoorty, in an attempt to reduce its priority sector lending (PSL) cost. The interest in this deal has been evinced on both sides, they said.

Experts feel the deal is a win-win for both Axis Bank and Spandana Sphoorty.

"Spandana Sphoorty's customer base will help Axis Bank in expanding its existing customer base and improve its cross-selling abilities," Gaurav Garg, Head of Research at CapitalVia Global Research told Moneycontrol.

On the other hand, "the microfinance institution would gain huge support from the parent bank and be able to sail through the tough times, amid pandemic, easier compared to its competitors," he said.

Investors can hold Spandana Sphoorty with a medium to long term perspective, Garg advised.

In a clarification note to the exchange, Spandana Sphoorty said the company was unaware of the source of Moneycontrol's report, adding that it does not "comment on media speculation."

The company is primarily engaged in the business of microfinance, providing small value unsecured loans to low-income customers in semi-urban and rural areas.

Spandana Sphoorty reported a significant fall in standalone profit to Rs 41.64 crore in March 2021 quarter, compared to Rs 77.5 crore in March 2020 quarter. In the same period, revenue from operations increased to Rs 459.2 crore from Rs 421.1 crore.

It is the second-largest microfinance company in India with assets under management (AUM) of Rs 8,157 crore and an active customer base of 24.45 lakh. It has a strong distribution network of 1,052 branches spread across 289 districts of 18 states.

"Assets under management grew by 19 percent YoY and 5 percent QoQ to Rs 8,157 crore in March 2021 quarter. Disbursements reached highest ever of Rs 2,426 crore in Q4 FY21, rising by 6 percent YoY," said Spandana Sphoorty in its BSE filing on May 22.

The microfinance lender raised Rs 1,914 crore during Q4 FY21 and Rs 5,482 crore in FY21.