Spandana Sphoorty Greenlights Rs 400 Crore Rights Issue to Rebuild Investor Confidence

Image Source: The Economic Times

Spandana Sphoorty Financial Ltd has approved a Rs 4 billion rights issue as part of its broader capitalraising strategy aimed at stabilizing operations and restoring investor sentiment. The move comes amid mounting pressure from rising nonperforming assets and a steep decline in market capitalization over the past year.

Key Highlights:

The rights issue will offer equity shares to existing shareholders, allowing them to subscribe at a discounted price and maintain their ownership stake.
Promoter Kedaara Capital, which holds a 48.13% stake, is expected to participate in the issue, signaling continued support despite its scheduled exit by September 2026.
The capital infusion is part of a larger Rs 7.5 billion fundraising plan approved earlier this year, with the rights issue forming the first tranche.

Strategic Rationale:

The funds will be used to strengthen the company’s balance sheet, reduce debt, and support lending operations in underserved rural markets.
Spandana aims to rebuild trust among institutional investors following a Rs 1,035 crore net loss in FY25 and a spike in gross bad loans to 5.63%.
The rights issue mirrors similar moves by peers like Fusion Finance, which saw a sharp recovery in valuation postequity infusion.

Market Context:

The microfinance sector continues to grapple with overleveraging, collapsing joint liability models, and high staff attrition.
Analysts view the rights issue as a necessary step to shore up liquidity and reposition Spandana for longterm sustainability.

Sources: Economic Times, Moneycontrol, MarketsMojo India, Pocketful.in