Public-listed microlender SKS Microfinance Ltd reported its third consecutive quarter of profit after tax at Rs 5 crore in the three months ended June 30, 2013, as a result of improvements in interest income and disbursements in states other than Andhra Pradesh, its key market. The firm incurred a loss of Rs 39 crore in Q1FY13.
The MFI booked a profit of Rs 1.2 crore for the first time in the quarter ended December 31, 2012, when it turned around after seven consecutive quarters of losses, caused by regulatory clamps on its business in AP.
The company’s net interest income increased 26 per cent year on year to Rs 63 crore in Q1FY14, on the back of a 51 per cent rise in loan disbursements to Rs 830 crore.
The firm has been aggressively reducing its operating cost through consolidation of branches and employees. Over the last year, it has reduced the number of branches to 1,255, down by 8 per cent, and pruned the number of employees by more than one-fourth to 9,959. It also managed to increase its active borrower base by 12 per cent year on year to 4.4 million borrowers.
On it total outstanding portfolio, SKS saw a 63 per cent year-on-year growth in non-AP states to Rs 2,003 crore while average portfolio outstanding rose 14 per cent in the quarter.
"Our third consecutive quarter of profit in Q1 FY14 is a result of the team’s implementation of the four-pronged turnaround strategy of fully providing for AP exposure, managing supply side shocks, cost structure optimisation and recapitalisation,” said S Dilli Raj, chief financial officer of SKS.
“With the overall improvement in the regulatory environment aiding our growth in credit assets and core income, we are gearing up for sustained growth and profits,” he said.
SKS had a net worth of Rs 395 crore and capital adequacy of 30.2 per cent as of June 30, 2013. Its write-offs increased 10 per cent to Rs 11 crore in Q1FY14.
SKS’ gold loan portfolio outstanding stood at Rs 61 crore in the quarter; the portfolio forms 3 per cent of its non-AP gross loans.
The firm is looking to end the financial year with non-AP disbursements worth Rs 4,500–4,800 crore and a non-AP gross loan portfolio of Rs 2,800-3,000 crore.
Banks such as Yes Bank and IDBI Bank continue to be the largest lenders of debt to the firm. FIIs, which held 13.41 per cent stake in the company at the end of FY12, raised their exposure to 35.94 per cent as of March 31, 2013.
The company’s share price last traded at Rs 99.45 a unit, up 0.20 per cent on the BSE in a weak Mumbai market on Thursday.
(Edited by Joby Puthuparampil Johnson)