CARE Ratings reaffirmed Spandana Sphoorty's long-term facilities at 'CARE BBB+; Stable'. The company also reported a reduced net loss for FY26 and a marginal profit in Q4FY26.
Spandana Sphoorty Financial Ratings Reaffirmed, FY26 Net Loss Reduced
CARE Ratings has reaffirmed Spandana Sphoorty Financial Limited's long-term bank facilities and debt instruments at 'CARE BBB+; Stable'. The company's commercial paper rating remains at 'CARE A2'.
Reader Takeaway: Ratings stable despite loss reduction; subsidiary merger and debt costs are key.
What just happened
CARE Ratings has maintained Spandana Sphoorty Financial Limited's credit ratings. Long-term facilities and debt instruments are rated 'CARE BBB+; Stable', and commercial paper is rated 'CARE A2'. The company reported a net loss of Rs 699 crore for FY26, an improvement from Rs 1,035 crore in FY25. A marginal net profit was achieved in Q4FY26, ending six quarters of losses.
Why this matters
The rating reaffirmation provides a signal of stability for the company's debt instruments. The reduction in net losses and the Q4 profit suggest a potential turnaround, which could positively influence investor sentiment and the cost of future borrowing.
The backstory
Spandana Sphoorty Financial has been navigating a period of financial stress, marked by declining Assets Under Management (AUM) and consecutive net losses. The company completed a rights issue in FY26, raising Rs 200 crore, with an option for another Rs 200 crore by March 2027.
What changes now
The company plans to merge its subsidiary, Criss Financial Limited, into Spandana Sphoorty Financial. This restructuring requires regulatory and shareholder approvals. Investors will be watching the integration process and its impact on the company's operational efficiency and financials.
Risks to watch
Concerns include an elevated average cost of funds at 12.6% in FY26. Although waivers were obtained, the company reported breaches of financial covenants on Rs 36 crore of borrowings as of March 31, 2026. Investors should monitor covenant compliance going forward.
Peer comparison
As of the latest available data, the microfinance sector has seen mixed performance. Companies focusing on operational efficiency and robust collection mechanisms have fared better. Spandana Sphoorty's collection efficiency of 99.7% in its X-bucket is a positive indicator.
Context metrics (time-bound)
As of March 31, 2026, Spandana Sphoorty reported a Capital Adequacy Ratio (CAR) of 35.9%. Total income for FY26 was Rs 1,066 crore, a decline from Rs 2,424 crore in FY25. AUM stood at Rs 4,420 crore in FY26, down from Rs 6,819 crore in FY25.
What to track next
Investors should monitor the successful merger of Criss Financial Limited, the company's ability to further reduce its cost of funds, and the sustainability of its recent profitability improvements.