SKS Micro at a new high

SKS Microfinance has been having a good run lately. Today, it opened higher at Rs,327, going on to hit a new 52-week high at Rs.336.40 and currently continues to trade strongly around the same levels.

The stock price is reacting to the very positive reports put out by Morgan Stanley since last week. The FII is also reported to have purchased 6.47 lakh shares at Rs.325 each. Morgan Stanley initiated coverage with an "overweight" rating and a target of Rs.385. It has stated that India's microfinance industry has $90 billion demand potential and it see’s SKS is in a better position than most peers to capitalize on that demand.

The company posted a robust set of numbers for Q1FY15. Loan disbursements grew by 40% (YoY) to Rs. 1,160 crore, NII was up 41% at Rs.89 crore and net profit for the quarter was up by a strong 81% (QoQ) at Rs.49 crore and up from Rs.5 crore in previous Q1. During the quarter, the company had incremental draw-downs of Rs. 575 crore.

Its portfolio excluding the states of Andhra Pradesh and Telangana registered a 39% (YoY) increase to Rs. 2,783 crore and Rs. 2,553 crore in Q4FY14 on monthly closing average basis. As of June 30, 2014, SKS Microfinance Limited had a net worth of Rs. 891 crore and capital adequacy of 39.6%. Cash and cash equivalents stood at Rs. 488 crore.