Shares of Suryoday Small Finance Bank Ltd fell by 6.05% to ₹126.87 on Friday, January 24, 2025, following the downward revision of its FY25 guidance and worsening asset quality. The lender reported a significant increase in its gross and net NPA ratios, leading to investor concerns.
Key Financial Highlights:
- Gross NPA: Increased to 5.53% in Q3 FY25, up from 3.03% in the previous quarter.
- Net NPA: Rose to 3.13%, from 0.8% in Q2 FY25.
- Provision Coverage Ratio (PCR): Dropped to 44.7%, compared to 74.3% in the previous quarter.
- Disbursals-to-AUM Ratio: Fell to 13.8% in Q3 FY25, down from 19.2% in Q2 FY25.
- Deposits: Increased by 50% YoY.
Revised FY25 Guidance:
- Gross NPA: Expected to remain below 6%, sharply revised upward from the earlier guidance of less than 2.5%.
- Net NPA: Revised to below 3.5%, up from the prior guidance of less than 0.6%.
- Loan Growth: Now expected to be 22%-25%, down from the earlier estimate of 30%-35%.
- Net Interest Margin (NIM): Expected to narrow to 9.2%-9.5%, from the earlier range of 9.5%-9.7%.
- Return on Assets (RoA): Revised down to 1.4%-1.5%, from 2.2%-2.3%.
- Return on Equity (RoE): Lowered to 10%-11%, from the earlier 14%-16%.
Stock Details:
- Previous Close: ₹135.04
- Day’s Range: ₹125.10 – ₹127.74
- Market Cap: ₹13.42 billion
- P/E Ratio: 5.78
- Year Range: ₹124.15 – ₹217.70
Management Commentary:
Shalabh Saxena, CEO and Managing Director, acknowledged the challenges faced by the microfinance sector, stating, “A wide set of challenges, including borrower leverage, dilution of the JLG model, and poor centre meeting attendance, continue to impact the sector. All these factors have manifested into challenges in maintaining collection levels.”
Market Reaction:
The revised guidance and deteriorating asset quality, coupled with lower-than-expected loan growth, led to a sell-off, pushing the stock down by over 6% during Friday’s trading session.
Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.
