SKS Microfinance sustains profit streak in Q4, non-Andhra loan portfolio up 35% over Q3

Public-listed microlender SKS Microfinance Ltd sustained its turnaround with a profit of Rs 2.7 crore in the fourth quarter ended March 31, 2012 with improvements in the interest income in states other than Andhra Pradesh. The firm incurred a loss of Rs 330 crore in Q4FY12.

The MFI booked a profit of Rs 1.2 crore first time in the December 2012 quarter, when it turned around after seven consecutive quarters of losses caused by the regulatory clamps on business in AP, its key market.

The firm improved its profitability on account of robust growth in assets with the core interest income in non-AP states increasing 15 per cent sequentially to Rs 90 crore in Q4FY13 from Rs 78 crore in the quarter ended December 31, 2012.

Its loan disbursements rose 65 per cent to Rs 1,295 crore, up from Rs 784 crore in the previous quarter while incremental draw-downs tripled to Rs 1,704 crore in Q4FY13 from Rs 566 crore in Q3FY13.

The non-AP loan portfolio outstanding increased 35 per cent to Rs 2,016 crore in Q4FY13 from Rs 1,496 crore in the three months ended December 31, 2012.

The company saw its cost of borrowing coming down to 12 per cent from 13.2 per cent in the last quarter while collection efficiency in 16 non-AP states has improved, said the company.

“With fully providing for the AP exposure, managing the supply-side shock, cost structure optimisation and recapitalisation as the building blocks of our turnaround strategy, we returned to profitability in Q3FY13 and with second quarter of profitability, the financial turnaround of SKS Microfinance is completed and sustained,” said S Dilli Raj, CFO, SKS Microfinance.

“These gains should accelerate on account of our strong capital base, robust liquidity as also improved productivity and cost efficiencies. Our debt-equity leveraging improved to 4.1 times in Q4FY13 from 2.7 times in Q3FY13 (2.3 in FY12),” he said.

In a recent interaction with VCCircle, he said that SKS would be looking to raise Rs 3,500 crore debt in the current financial year and it would not require equity infusion. The company would raise debt through securitisation and bank debt and would explore new options such as external commercial borrowing.

Foreign Institutional Investors (FIIs), who held 13.41 per cent stake in the company at the end of financial year 2011-12, raised their exposure to 35.94 per cent as of March 31, 2013.

The company’s share price last traded at Rs 127.6 a unit, up 1.03 per cent on the BSE in a strong Mumbai market on Wednesday.

It had a net worth of Rs 390 core and a capital adequacy of 32.8 per cent as of March 31, 2013. Cash and bank balance stood at Rs 895 core.

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