Spandana Sphoorty Financial shares drop to day’s low after ICRA downgrade

Shares of Spandana Sphoorty Financial Ltd dropped  2% to hit a day’s low of ₹276.65 on the BSE after rating agency ICRA downgraded the company and retained a Negative outlook.

The downgrade reflects the lender’s continued struggles with weak asset quality and profitability. In simple terms, a rising number of borrowers are either delaying or defaulting on their loan repayments.

As of March 2025, the company’s gross stage 3 loans—which refer to loans that are over 90 days past due—rose sharply to 5.6% of total assets, compared to just 1.7% a year earlier. Early-stage stress was also high, with 14.8% of loans overdue by more than 30 days.

Despite some improvement in loan collections in the March quarter, the situation remains fragile. The company wrote off ₹1,618 crore worth of bad loans during the year, including ₹647 crore in Q4 alone.

These write-offs, combined with poor recoveries, pushed up credit costs significantly—eating into earnings and resulting in a net loss of 8.6% of average managed assets for FY25. This compares with a net profit of 4.1% in FY24.

Also Read: Spandana Sphoorty slips into red, posts Q4 loss of ₹434 crore, revenue tanks 38%

ICRA also highlighted that Spandana breached financial covenants on ₹1,058 crore worth of non-convertible debentures (NCDs). While it has secured waivers for around ₹800 crore, waivers are still pending for the remaining debt and some term loans, raising red flags.

Adding to investor concerns was the sudden exit of the managing director and CEO in April. Though the company has a seasoned leadership team and is sitting on a liquidity buffer of ₹1,356 crore, ICRA said continued stress or lack of improvement could trigger further rating action.