ICICI Securities is bullish on Spandana Sphoorty recommended buy rating on the stock with a target price of Rs 690 in its research report dated September 03, 2020.
ICICI Securities research report on Spandana Sphoorty
Spandana Sphoorty Financial (Spandana) in Q1FY20 continued its proactive approach in strengthening balance sheet by building additional Covid-19-related provisions at Rs0.9bn (~130bps of AuM) and taking cumulative contingency buffer to 320bps - highest within the MFI space. Notably, collection efficiency improved steadily - from lows of 2% in April, it improved to as high as 92% as on 30th August’20 with customer activation remaining robust at ~87%. Better-thanindustry collections were supported by A) higher rural-based customers (~95%), B) bi-weekly collection model, C) ability to extend emergency loans to needy borrowers and D) effective communication with borrowers about cost of moratorium & benefits of maintaining good payment track record.
While ~13% inactive customer base poses near-term risk on asset quality, diversified operations with 95% of districts having.
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