Buy Spandana Spoorthy Financial; target of Rs 1400: ICICI Securities

ICICI Securities research report on Spandana Spoorthy Financial

Spandana Spoorthy (Spandana), in its Analyst Day, unveiled ‘Vision 2028’ – a roadmap that emphasis on a techenabled customer-led growth journey and a strong focus on risk management. Spandana aims to grow its AUM to INR 280bn (implying >25% CAGR between FY23-28) with a customer base of ~6.2mn (implying 22% CAGR). Vision 2028 also stresses on effective capital utilisation, evident in its near-term RoE target of 22-24% and sustainable RoE at >18% and likely AUM CAGR of ~25% between FY23-28. Microfinance would remain the core business and shall strictly follow the JLG model with weekly collection.

Outlook

The company also plans to scale the secured business via its wholly-owned subsidiary Criss Financial with LAP and Nano enterprise loans. It does not intend to enter into individual unsecured loans in the near-future; if at all it does enters this space in the medium term, it would cap maximum exposure at 5% of total AUM. Retain BUY; TP revised to INR 1,400 (from INR 1,100), valuing at 2.5x (earlier 2x earlier) Sep-24E BVPS.

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