Spandana Sphoorty FY25 loss: Q4 -434 cr, revenue -38%

Spandana Sphoorty Financial reported a sharp swing into losses in Q4 FY25, reflecting stress across the microfinance operating environment and the lender’s own cautious stance on disbursements. The Hyderabad-based company posted a consolidated net loss of Rs 434.3 crore for the March quarter, reversing a profit of Rs 128.6 crore in Q4 FY24, according to its stock exchange filing carried in reports.

The quarter also showed a steep decline in business activity. Revenue from operations fell 38% year-on-year to Rs 414.8 crore in Q4 FY25 from Rs 669 crore a year earlier. At the operating level, EBITDA turned negative at Rs 389 crore, compared with an EBITDA profit of Rs 394.6 crore in Q4 FY24.

Q4 FY25: Losses widen as activity slows

The Q4 numbers highlighted how quickly earnings can swing for microfinance lenders when collections weaken and incremental disbursements slow. Spandana said the business was hit by a “challenging environment”, and it adopted a cautious lending approach that reduced activity. That decision coincided with a sharp fall in revenue and a deeper quarterly loss.

Collection performance stayed soft through the quarter. Gross collection efficiency in Q4 FY25 was 91.5%, slightly lower than 92.4% in Q3 FY25. Net collection efficiency was largely unchanged at 90.9%, as per the company’s filing.

FY25 snapshot: Income and NII slip

For the full year, total income fell 3% year-on-year to Rs 2,424 crore in FY25. Net interest income (NII) declined 5% to Rs 1,228 crore from Rs 1,289 crore in FY24, based on management commentary.

Yield on assets fell by 173 basis points to 22.5% in FY25, while the cost of borrowings was largely stable at around 12%. The combination of lower yields and pressure on collections fed into profitability, even as the company remained focused on recovery and tighter underwriting.

AUM contraction: Scale drops sharply

The most visible impact of the slowdown was on the size of the loan book. Assets under management (AUM) declined 43% year-on-year to Rs 6,819 crore as of March 2025 from Rs 11,973 crore as of March 2024. For FY25, loan disbursements fell 48% to Rs 5,605 crore.

Rating commentary also pointed to a sharper contraction soon after year-end. As cited in reports, Spandana’s consolidated AUM fell to Rs 4,958 crore as of June 2025 from Rs 11,973 crore as of March 2024, underscoring the speed of deleveraging.

Asset quality: GNPA and NNPA move higher

Asset quality deteriorated through the closing months of FY25. Gross NPA rose to 5.63% in March 2025 from 4.85% in December 2024, while net NPA increased to 1.19% from 0.98% over the same period. The company reported a provision coverage ratio (PCR) of around 80%, indicating elevated provisioning against problem loans.

Separately, Spandana disclosed that recoveries increased from overdue buckets. It recovered about Rs 52 crore from GNPA or “90 plus buckets” including the write-off pool in Q4 FY25 versus Rs 44 crore recovered across Q3 FY25. Overall recoveries during FY25 were Rs 96 crore, as per management commentary.

Write-offs and FY25 loss: What the ratings flagged

In a detailed assessment cited in reports, rating agencies highlighted the stress from sustained losses and weakening operating efficiency. The lender reported a Rs 360 crore consolidated net loss in the June quarter, translating into an annualised return on assets of negative 20.4%. For FY25, it suffered a net loss of Rs 1,035 crore.

The same commentary said the company wrote off bad loans of Rs 642 crore in the first quarter and Rs 1,618 crore in FY25. It also highlighted a sharp rise in the cost-to-income ratio to 142.5% in the first quarter of the current fiscal from 62.1% in FY2025, reflecting operating deleverage as scale contracted.

FY26 developments: Q2 loss, but disbursements rise sequentially

More recent disclosed metrics suggest activity started to pick up sequentially even as profitability remained under pressure. In Q2 FY26, total income was Rs 239 crore, a 21% quarter-on-quarter decline, while NII was Rs 91 crore, down 20% QoQ. Yield improved to 19.6% (up 21 bps QoQ), but the cost of borrowings increased to 12.6% (up 27 bps QoQ).

The company reported a net loss of Rs 249 crore in Q2 FY26, driven by elevated credit costs due to higher gross slippages, subdued income amid degrowth, and higher operating expenses. Pre-provision operating profit (PPOP) was negative at Rs 40 crore in Q2 FY26, the same as Q1 FY26.

Operationally, it reported Rs 48 crore recoveries in Q2 FY26 and a sequential increase in disbursements to Rs 934 crore from Rs 280 crore in Q1 FY26. AUM stood at Rs 4,088 crore as of September 30, 2025, while standalone GNPA and NNPA were 4.97% and 0.97% respectively. Net collection efficiency improved to 92.4% (from 90.6% in Q1 FY26), and reported liquidity was Rs 1,179 crore at the end of September 2025.

Capital and liquidity: Comfort despite earnings pressure

Management commentary indicated the company was “comfortably placed” on capital and liquidity despite the earnings stress. It cited capital adequacy of 37% and close to Rs 2,000 crore in liquidity, along with gearing of 2.1 times.

It also discussed a larger number of Rs 438 crore in total, split into Rs 260 crore from the capital markets and about Rs 178 crore from term lending, and said it expected this figure to start going down in the near future, with lender support and necessary waivers in place.

Historical context: FY24 strength before FY25 reversal

The contrast with FY24 performance helps explain why the FY25 reversal has been closely tracked. In FY24, the company’s income from operations was reported at Rs 2,299.76 crore, while AUM was Rs 11,198.72 crore as of March 31, 2024 compared with Rs 7,979.59 crore as of March 31, 2023. Profit before tax in FY24 was Rs 626.02 crore versus Rs 18.25 crore in FY23, as cited in company commentary.

In the March quarter of the previous year, Spandana also reported a net profit of Rs 129 crore versus Rs 106 crore in the year-ago period, with net interest margin improving to 14.6% from 13.9% and quarterly NII at Rs 378 crore, up 41% year-on-year, as per an Economic Times report.

Key numbers at a glance

What to watch next

Rating agencies cited in reports expect pressure to persist in the near term, with CareEdge Ratings expecting losses for two more quarters. Management, meanwhile, said it is optimistic about normalisation by the second quarter of the current financial year and remains focused on corrective steps, prudent underwriting, and recoveries.

Investors will track how quickly AUM stabilises, whether collection efficiency improvements sustain, and how impairment costs tied to portfolios originated in FY24 and FY25 evolve across the coming quarters.