In Wednesday’s trading session, a prominent microfinance institution in India, specializing in providing financial services to low-income households in rural and semi-urban areas, jumped 17 percent followed frequent volume spike, positive technical indicators, and many more.
Price action
With a market capitalization of Rs. 2,871.81 crores on Wednesday, the shares of Spandana Sphoorty Financial Limited were trading at Rs. 465 up by 17 percent making a high of Rs. 472 per share compared to its previous closing price of Rs. 400.45 per share.
What Happened
Spandana Sphoorty Financial Limited, specializing in providing financial services to low-income households in rural and semi-urban areas, has been in bullish momentum for the past two days, climbing nearly 53 percent from its recent low.
While there is no specific reason or recent company update to explain the sudden surge in the stock, it has experienced significant volume spikes. Additionally, the Department of Financial Services’ consultative meetings with the Fintech and MFI sectors, along with the stock’s strong technical indicators, might also be contributing factors for the surge.
As per sources the Department of Financial Services is holding consultative meetings with the Fintech and MFI sectors from January 7 to January 16 to address industry concerns and gather feedback. The discussions will focus on easing repayment schedules and improving access to better borrowing rates. However, there is concern that the government may not offer significant support, as the issue stems from lenders over-leveraging.
From a technical standpoint, the stock remains strong, as it is currently trading above its 20-day, 50-day, and 100-day simple moving averages (SMAs), confirming its positive outlook. Additionally, the Relative Strength Index (RSI) has been in the strong zone of 70.
About the Company
Spandana Sphoorty Financial Ltd. is a microfinance institution in India, specializing in providing financial services to low-income households in rural and semi-urban areas. The company offers a range of financial products, including income-generating loans, business loans, and emergency loans, primarily targeting women in underserved communities.
Spandana Sphoorty focuses on financial inclusion by empowering women and supporting their entrepreneurial activities through microcredit. With a strong presence across various states, the company has built a reputation for its customer-centric approach and commitment to improving the financial well-being of economically disadvantaged sections of society.
Key Insights
Spandana Sphoorty Financial Limited has demonstrated strong financial performance with an average 3-year revenue growth of 18.33 percent and an impressive average 3-year net profit growth of 92.84 percent. Additionally, the company’s price-to-earnings (P/E) ratio stands at 30.1, which is below the industry average of 32.92, indicating a relatively attractive valuation compared to its peers.
Shareholding Pattern
The ownership structure of Spandana Sphoorty Financial Limited is as follows: promoters hold a significant 55.83 percent stake in the company, while Foreign Institutional Investors (FIIs) own 22.64 percent. Domestic Institutional Investors (DIIs) have a share of 7.33 percent, and the remaining 14.19 percent is held by the public
Financials
The company’s revenue rose by 10.3 percent from Rs 640.21 crore to Rs 706.57 crore in Q2FY24-25. Meanwhile, Net profit dropped from Rs 125.2 crores profit to loss of Rs 216.33 crore during the same period.
Key Financial ratios
Spandana Sphoorty Financial Ltd has a Return on Equity (RoE) of 2.72 percent and a Return on Capital Employed (RoCE) of 10.06 percent. Furthermore, the company’s debt-to-equity ratio is 2.14.
Written by Sridhar J
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