wow! Its a free fall for Spandana~!
New Management seems action oriented and they talk a good game managing risks. All of MFI is struggling but then, the way Spandana price has gone down makes me wonder whether there is any big surprise awaiting in the Q2 results. Have to wait and see.
I have invested in both Bonds and Equity of Spandana.
As you would have seen from the market leader’s results and commentary for Q2, it’s going to be worse for the sector overall.
No kidding! I did not expect GNPA to jump close to 5% in 1 quarter.
And information in the deck does not give me confidence that worst is over.
“ICRA also notes that the company had breached some of the financial covenants related to the asset quality and profitability
in respect of Rs. 698.6 crore of non-convertible debentures (NCDs) and Rs. 124.7 crore of term loans outstanding as of October
2024. Of this, as on date, the company has received early redemption request for Rs. 196.3 crore of NCDs from debenture
holders, while it has asked for covenant waivers for the other cases. In the near term, SSFL’s ability to obtain the requisite
waivers for these cases and restrict significant early redemptions would be a key monitorable. Nevertheless, ICRA notes that
the company is maintaining adequate liquidity (on-balance sheet (on-b/s) of Rs. 1,331.5 crore as on September 30, 2024),
sufficient to cover approximately two months of debt repayment obligations without considering the inflows from loan
collections.” - This is from the latest credit rating report.
People who are already tracking - pls share your views.
Would like to know what is breached? is it like increasing GNPA nos over threshold or failure in interest payments?
What is the risk for shareholders and bond holders (if any) pls?
Received few emails around this as I’m invested in their bonds.
Sub: Spandana Sphoorthy Financial Limited 30-September-2024 Notice to call for the meeting of Debenture Holders pursuant to Breach of Covenant ISIN INE572J07653
| Actionable | % Required | % Received |
|---|---|---|
| The Breach of Covenant can be waived off on instructions of majority debenture holders | 51% | 00.05% |
| The debentures can be redeemed early on the instructions of majority debenture holders | 51% | 40.65% |
Disclosure: Invested in bonds.
They have announced a fundraise of Rs. 750 crore (timing and mode yet to be decided) in the December 2024 result.
AUM has shrunk drastically, more than all its peers.
They are taking a big knock
