Add Spandana Sphoorty Financial, target price Rs 460: ICICI Securities

ICICI Securities has add call on Spandana Sphoorty Financial Ltd. with a target price of Rs 460. The current market price of Spandana Sphoorty Financial Ltd. is Rs 394.45. Time period given by analyst is one year when Spandana Sphoorty Financial Ltd. price can reach defined target.

Spandana Sphoorty Financial Ltd., incorporated in the year 2003, is a Mid Cap company (having a market cap of Rs 2547.67 Crore) operating in NBFC sector.

Spandana Sphoorty Financial Ltd. key Products/Revenue Segments include Interest, Income From Sale Of Share & Securities, Bad Debts Recovery and Commission for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 396.19 Crore, down -8.90 % from last quarter Total Income of Rs 434.90 Crore and up 11.88 % from last year same quarter Total Income of Rs 354.11 Crore. Company reported net profit after tax of Rs -58.67 Crore in latest quarter.


Investment Rationale
Total provision buffer stands at Rs8bn or ~12.4% of AuM as on Sep’21. Considering 50% coverage on existing NPL, ~17% restructured book, PAR 31-60 at 2.4% and possibility of third-wave, the brokerage increases credit cost assumption to 8% / 3% in FY22/23e from 4% / 2% respectively earlier. Similarly, the brokerage trims earnings estimate by 80% / 40% for FY22/23e and revised TP to Rs460 (earlier Rs840).

Promoter/FII Holdings
Promoters held 62.29 per cent stake in the company as of 30-Sep-2021, while FIIs owned 12.43 per cent, DIIs 4.55 per cent.