SPANDANA could be next in IPO trail from Indian Microfinance sector

August 2, 2010 3:47 AM EDT

Seeing good performance of SKS Microfinance IPO, other big players in the sector are also gearing up to explore the capital market.

Hyderabad-based Spandana Sphoorty Financial Ltd, which is ranked 6th in the world and 2nd in India in terms of outreach by Microfinance Information Exchange (MIX), could be the next in IPO trail as their board is actively evaluating the option to go public, said a report by sector newsportal Microfinance Focus.

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In response to a question whether SPANDANA is planning to go public, Padmaja Reddy, Founder and Managing Director of SPANDANA told Microfinance Focus: “We are evaluating this at the board level”.

“Success of SKS Microfinance IPO signifies the belief of investors on poor women. It is a full proof to say that poor women are the best borrowers. The most important finding in the last two decades in the world of finance is Microfinance”, she added.

Established in 1998, SPANDANA has been enhancing its client outreach and as of June 30, 2010, it was serving 4.45 million clients through 1, 655 branches. It has disbursed a total of 137.63 million rupees and has a record of a repayment rate of 99.9%.

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The organization which aims to be in the global top 2 Microfinance organizations by 2012 has already emerged as a leader in terms of profitability. Its Return on Equity (RoE) stood at 53 percent as against the industry average of 23 percent (Intellcap-20). Its Return on Assets (RoE) is also double the industry average at 8.2 percent against the average figure of 4 percent in the sector.

A comparative analysis of SKS and SPANDANA performance based on their financial results for financial year 2010 reveals that SPANDANA is vibrantly competing with SKS and has done better in many quarters.

(Disclaimer: By arrangement with Microfinance Focus. All copy rights reserved by Microfinance Focus. International Business Times is not responsible for any omissions or commissions in the article.)