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Spandana Sphoorty Financial Ltd.

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ABOUT

  • Came out as a public company in 2003 and registered s an NBFC with RBI in 2004. Company was incorporated with a mission of rendering income generating loans in rural areas particularly to the women from poor or low income households.
  • Company has a vast network all over India clearly statistics reflect as of June 30, 2019, we had 7,062 employees (including 5,051 credit assistants) operating out of 929 branches in 269 districts across 16 states and 1 union territory in India.
  • Company was seriously damaged around 2010 when most of its credit collections suffered affecting the cash-flow due to change in some regulation by Andhra Pradesh government but company regained the grip in 2013 showing significant profits after the aid of several measures taken.
  • Company serves the rural areas with unnoticed potential of market growth if the the credit flow was sufficient. In order to make the credit flowing company focuses on resending loans to existing customers with more ease of simplified grant process.

 

BUSINESS STRATEGY

  • FOCUSES ON INCOME GENERATION FOR ORGANIC
    BUSINESS GROWTH
    The Company’s whole business model is based on providing income generation loans such as ‘Abhilasha Loans’. To make the process more efficient the commencement of documentation of loan for existing customers at the time when the two instalments of their existing loan are due. Thus loan can be paid out on the same day that the existing loan is paid out.
  • TARGETING THE LESS PENETRATED MARKET TO
    PROVIDE UNIFORMITY
    The company evaluates a state on various key features to compute the opportunities of untouched market so that it can render into those isolated areas with more impact and pre requisite knowledge of demand and supply.
  • MAINTAINING THE EXPOSURE LEVELS
    The company concentrates on maintaining low ticket sizes
    and to make this possible it uses the large branch network which thresholds the low exposure level per branch. Company focuses on opening new branches in existing branch network, splitting large branches as per demand and targeting the less exposed vulnerable states with great potential.
  • VARIETY OF FUND RAISING SOURCES
    To increase the fluidity of credit flow company seek to not depend on fixed variety and number of sources. Having diversified funding sources makes raising the credit more easier and reliable.

 

INITIAL PUBLIC OFFERING

BID/OFFER OPENS ON August 5,2019
ISSUE TYPE Book Built Offer
BID/OFFER CLOSES ON August 7,2019
ISSUE PRICE Rs 853-Rs 856 Per Equity
Share
ISSUE SIZE Rs 1200.94 Cr.
FACE VALUE Rs 10 per Equity Share
MARKET LOT 17 Equity Shares
LISTING AT BSE & NSE

 

LIST OF PROMOTERS

  • PADMAJA GANGIREDDY
    Padmaja Gangireddy, aged 52 years, is the Promoter and Managing Director of our Company.
  • KANGCHENJUNGA
    Kangchenjunga is a company incorporated on April 9, 2013 under the laws of Mauritius having its registered office at Suite 11, 1st Floor, Plot 42,Hotel Street, Cybercity 72201, Ebene, Republic of Mauritius.

SHAREHOLDING PATTERN

NAME OF SHAREHOLDERS NUMBER OF EQUITY SHARES PERCENTAGE OF SHARE CAPITAL(%)
Kangchenjunga Limited 35,270,269 59.14
Padmaja Gangireddy 11,670,067 19.57
Valiant Mauritius Partners FDI
Limited
4,632,570 7.77
JM Financial India Trust II - JM
Financial India Fund II
3,313,314 5.56
Vijaya Siva Rami Reddy
Vendidandi
1,491,483 2.50
Helion Venture Partners II LLC 785,135 1.32
Kedaara AIF 1 766,815 1.29
Helion Venture Partners LLC 731,136 1.23
JM Financial Products Limited 541,535 0.91
Spandana Employee Welfare
Trust
274,143 0.46
Total 59,476,467 99.74

INDUSTRY ANALYSIS

COMPOSITION OF NUMBER OF CREDIT AND DEPOSITS ACCOUNTS (MARCH 2017)

There are 642 Million deposits accounts and 39 Million saving accounts in rural India.

Which accounted 34% of total deposits accounts and 23% of loan accounts in scheduled commercial banks despite rural India making up about 68% of total population.

 

STATE WISE OUTSTANDING CREDIT IN RURAL AND URBAN AREAS (DECEMBER 2018)

States with credit outstanding of more than INR 4 billion and states with credit outstanding less than INR 4 billion holds a major difference in the sizeable gap between the credit outstanding in rural areas and urban areas.

Clear indications of deficient credit availability in rural areas are reflected by the fact that in most states, the credit outstanding in urban areas is multiple times more than that of in rural areas.

Instead of continuous efforts made by RBI and Government of India, rural areas are still suffering with outstanding credit crisis and to fill this huge gap private creditors can jump into the game and grasp this golden opportunity.

Particularly, MFIs () as they have the sources to reach this isolated section of economy and generate credit at remote locations of the country.

 

TOP 10 COUNTRIES WITH HIGHEST NUMBER OF ACTIVE BORROWERS
AND MAXIMUM GROSS LOAN PORTFOLIO

Being the largest market in both the aspects, number of micro finance borrowers and gross loan portfolio (GLP) , outstanding amount after paying the credit is on the lower side.

In terms of number of borrowers India holds almost 32% of total 119,985 borrowers all over the world and in terms of value India takes almost 19% of total $111.6 billion micro finance market.But still the overall GLP per borrower is noticeably lower than the word average.

 

 

GROWTH AND DEVELOPMENT OF INDIAN MICRO FINANCE INDUSTRY

Micro finance sector in India has grown at a CAGR of 23.1% over past ten years to reachINR 2,633 billion as of March 2019.

 

KEY TRENDS IN THE INDIAN MICRO FINANCE SECTOR

SHG bank linkage and MFI channels have proved to be an aid in improving the credit accessibility, thus moderately maintaining the ticket sizes (loan outstanding per borrower). Loan outstanding per borrower was was INR 24.972 in march 2019.

 

 

 

COMPANY ANALYSIS

OUTREACH

KEY OUTREACH
INDICATOR
March-14 March-15 March-16 March-17 March-18
GROSS LOAN
PORTFOLIO
(INR CRORE)
902 1,193 1,220 1,297 3,166
DISBURSEMENT
(INR CRORE)
1,667 1,983 1,793 2,059 3,858
NO. OF BORROWERS
(MILLION)
1.12 1.07 1.07 1.06 1.59
NO. OF BRANCHES 1059 772 503 526 694
NO. OF STATES 11 12 12 13 15

 

FINANCIAL OVERVIEW

(INR Million)

Year Total Revenue Net Profit Total Assets Total Expenses
March 31,2016
(Standalone)
4,727 2,432.4 20,998 2,294.6
March 31,2017
(Standalone)
4,218.3 5,29.5 24,132 3,452.9
March 31,2018
(Consolidated)
5,875.31 1,879.46 37,642.47 3,048.30
March 31,2019
(Consolidated)
10,485.29 3,119.00 49,319.07 5,750.57

Total Revenue

 

Net Profit

 

Total Assets

 

Total Expenses

 

STATISTICAL OVERVIEW

The following table and graph shows the return on equity and earning per share between 2016 to 2018 :

Year RONW (%) EPS (Rs)
2016 Not Applicable Not Applicable
2017 13.52 42.52
2018 16.51 53.46

 

MAJOR INDUSTRY PLAYERS & COMPARISON
(WITH LISTED PEER)

NAME OF COMPANY STANDALONE/
CONSOLIDATED
NET PROFIT BASIC EPS
(RS)
P/E RONW
(%)
NAV/
SHARE
(RS)
Bharat Financial
Inclusion Limited (A)
Standalone 9,846 70.39 16.1 23.31 301.3
Spandana Sphoorty
Limited (B)
Consolidated 3,119 53.46 - 16.51 316.33
Satin Creditcare
Network Limited (C)
Consolidated 2,015 41.67 8.8 17.53 235.0
Ujjivan Financial
Services Limited (D)
Consolidated 1,504 12.43 28.0 8.01 155.0
Bandhan Bank
Limited (E)
Standalone 19,515 16.36 32.1 17.42 93.9
Bajaj Finance
Limited (F)
Consolidated 39,950 69.33 43.6 20.28 340.8
Cholamandalam
Investment &
Finance Company
Limited (G)
Consolidated 11,966 76.56 18.9 19.27 397.1
Shriram City Union
Finance Limited (H)
Consolidated 10,055 151.83 12.2 15.03 1,013.7
Sundaram Finance
Limited (I)
Consolidated 10,298 105.40 17.6 12.88 719.9
Mahindra &
Mahindra Financial
Services Limited (J)
Consolidated 18,673 29.73 29.73 16.46 183.7

NET PROFIT

BASIC EPS

P/E

RONW(%)

NAV/SHARE (RS)  

REFERENCES

  • SPANDANA SPHOORTY RHP(WWW.SEBI.GOV.IN)
  • WWW.SPANDANAINDIA.COM

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