Bharat Financial

SKS Micro posted exuberant Q3Fy14 numbers with a whopping 19 times rise in net profit at Rs.21 crore which it posted for Q3FY14, thanks to its strategy of working outside Andhra Pradesh. Its non-AP Portfolio grew 58% (YoY) and 17% (QoQ) at Rs. 2,364 crore. Loan Disbursement grew 79% (YoY) and 43% (QoQ) at Rs. 1,399 crore. The company seems to be well on its way to meet the average Loan Disbursements guidance of Rs. 4,500–4,800 crore for FY14. What also helped was the reduction in cost of borrowing, which fell from 16% in Q4FY12 to 13.8% in current Q3. Also its non-AP collection efficiency has improved from 95.6% in FY12 to 99.8% at end of 9MFY14. Economic value of the un-availed deferred tax provision of Rs 567 crore has also started showing up on the profit and loss statement.

The company has also cut expenses by bringing down its branches by 3% (YoY) and the tally now stands at 1256. Total employee count has also come down 20% (YoY) and down 2% (QoQ) at 8958, with maximum reduction seen in regional office staff. In terms of gold loan, it currently stands at 2.5% of its non-AP gross loan portfolio. CAR, as per RBI requirements needs to be at 15%, while SKS, for Q3FY14 had a CAR at 28.1% and without the AP benefit, it stands at 21.6%. Cash and bank balance which at end of Q2FY14 stood at Rs.630 crore has halved to Rs.309 crore at end of Q3FY14. In terms of asset quality, quality has improved with Gross NPA coming in at 0.06% v/s 0.2% in Q2 and Net NPA was at 0.04% v/s 0.2% in Q2. Cost to income has also come down sharply from 138.1% at end of 9MFY13 to 76.6% at end of 9MFY14.