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Startup Deep Dive : Spandana Sphoorty Financial — record profit to record loss in 18 months

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The Invincible India Startup Deep Dive featured graphic for Spandana Sphoorty Financial.

In FY24, Spandana Sphoorty Financial posted the highest annual profit in its history: ₹501 crore (~$52 million), as per its own results announcement. Eighteen months on, the same lender was booking a net loss of ₹1,035 crore for FY25, its assets under management down 43% and its chief executive gone within the year.

Spandana is one of India’s oldest microfinance institutions, listed on the NSE and BSE, lending small, collateral-free sums to low-income women across rural and semi-urban India. It has been declared near-dead once already, in 2010, and clawed back to a stock-market listing in 2019. The FY25-FY26 slump is not a new story for Spandana so much as a familiar one repeating on a national scale, as the entire microfinance sector re-learned what happens when growth outruns underwriting.

Quick facts

Company Spandana Sphoorty Financial Limited
Founded 1998, Guntur, Andhra Pradesh (as SRUDO, an NGO)
Founder Padmaja Reddy Gangireddy
Business NBFC-MFI: unsecured joint-liability-group loans to low-income women in rural and semi-urban India
Latest FY revenue ₹1,024 crore consolidated total income, FY26 (year ended March 2026)
Latest FY profit/loss Net loss of ₹699 crore, FY26 (consolidated)
Listed 19 August 2019, NSE and BSE (ticker: SPANDANA)
Market value ₹1,782 crore, as of 25 September 2026 (Sharekhan)
Key leadership Venkatesh Krishnan, MD & CEO from 27 November 2025; Dipali Hemant Sheth, Non-Executive Chairperson from 23 July 2026; promoter group (Kedaara Capital entities) held 48.2% as of March 2026

What they do

Spandana Sphoorty Financial is a Hyderabad-headquartered, NSE/BSE-listed non-banking finance company classified by the Reserve Bank of India as an NBFC-MFI. It lends small, unsecured sums, typically a few tens of thousands of rupees, to women in rural and semi-urban India who have no collateral and limited access to formal banks. Loans are extended through the joint-liability-group model: borrowers organise into small groups that vouch for one another’s repayment, a structure microfinance lenders across India have used since the 1990s to substitute for collateral. As of March 2025 the company operated across 20 states through 1,804 branches at the consolidated level, and by the FY26 Business Responsibility and Sustainability Report it employed 9,405 permanent staff across 1,327 branches, 85% of them rural.

The origin

Padmaja Reddy started Spandana in 1998 in Guntur, Andhra Pradesh, not as a company but as an NGO called SRUDO, the Spandana Rural and Urban Development Organisation. The idea was plain: lend small amounts to low-income women who banks would not touch, women running vegetable stalls, tailoring a few garments a week, keeping a milch animal or two, and who needed working capital in units of a few thousand rupees rather than a few lakh. The lending model broke even within its first year, a signal that the unit economics of very small, very short loans could work if collections were disciplined. In March 2003 the operation was formally incorporated as Spandana Sphoorty Innovative Financial Services Ltd, later renamed Spandana Sphoorty Financial Ltd, converting a development project into a regulated lending business. Between 2003 and 2010 it expanded hard, growing at a compound rate approaching 100% a year and becoming one of India’s largest microfinance institutions by loan book, according to the company’s own profile and industry write-ups of the period.

The struggle years

The growth that built Spandana in the 2000s nearly destroyed it in 2010. That October, the Andhra Pradesh government issued an ordinance to rein in aggressive microfinance collection practices after a wave of borrower suicides was linked to over-indebtedness and coercive recovery. Borrowers in the state, Spandana’s home market, took the ordinance as licence to stop repaying. According to a Center for Financial Inclusion case study of the episode, the loan repayment rate across the sector in Andhra Pradesh collapsed from 99.89% to about 1% within a month, and roughly ₹7,000 crore of loans across 6.25 million accounts came under stress. Nearly half of Spandana’s own portfolio sat in Andhra Pradesh at the time, so the collapse hit it harder than most peers.

The company could not service its lenders. In September 2011 it signed a Master Restructuring Agreement with creditors under corporate debt restructuring, the formal insolvency-avoidance route Indian banks used for stressed borrowers before the Insolvency and Bankruptcy Code existed. Spandana spent close to six years inside CDR, operating under lender oversight with its growth frozen and its balance sheet in workout. It exited CDR only in April 2017, after a fresh equity infusion led by Kedaara Capital Investment Managers, alongside new funding lines from three banks, according to rating-agency disclosures and Kedaara’s own account of the deal. A second, quieter struggle followed a decade later: in November 2021, founder Padmaja Reddy resigned as managing director after a public falling-out with Kedaara over the company’s direction, a rupture examined in the next section.

The turning point

The 2017 Kedaara-led recapitalisation is the single event that separates Spandana’s near-collapse from its listing two years later. Padmaja Reddy, still running the company as MD, used the fresh capital and lender confidence to rebuild the loan book from about ₹1,000 crore in March 2017 to roughly ₹8,000 crore by March 2021, an eightfold expansion in four years, as she later stated in a public letter explaining her exit. The rebuilt, de-risked balance sheet is what made an IPO viable: Spandana’s shares listed on the NSE and BSE on 19 August 2019 at ₹824, a 3.7% discount to the ₹856 issue price, after an offer that raised about ₹1,190 crore and was subscribed 1.05 times overall.

The same turnaround that enabled the IPO also set up the next rupture. Reddy said in her November 2021 resignation letter that Kedaara, sitting on a paper profit of roughly ₹1,800 crore against an investment of about ₹900 crore, wanted to sell the company to Axis Bank at what she considered a low valuation, and that she resigned rather than go along with the sale. The company and Reddy disputed each other publicly for months before reaching a board-approved settlement on 21 June 2022, by which point Spandana had already lost the founder who had steered it from an NGO in Guntur to a listed lender.

The money behind it

Spandana’s capital history runs from early venture-style stakes through a large private-equity rescue to a public listing:

What changed with each backer: Helion and Valiant’s early stakes financed the pre-crisis branch expansion; Kedaara’s 2017 capital, and the credibility it lent with lenders, is what got Spandana out of CDR and back to growth; the IPO gave the company a public currency and disclosure discipline it did not have as a private, restructured NBFC. As of March 2026, the promoter group, made up of Kedaara Capital entities, held 48.2% of Spandana, with foreign institutional investors holding 19.9%, domestic institutions 5.8%, and public shareholders the remaining 26.2%, per shareholding-pattern data compiled by Trendlyne and Choice India. Kedaara Capital Fund III LLP alone held 7.0% as of June 2026.

How it makes money

Spandana’s business is simple in structure and unforgiving in execution:

The numbers

Spandana’s income statement over the past four financial years shows the swing from record profit to record loss and a partial recovery beginning in FY26:

Financial year Total income (₹ crore) Net profit/(loss) (₹ crore)
FY23 (year ended March 2023) 1,477 123
FY24 (year ended March 2024) 2,534 501
FY25 (year ended March 2025) 2,424 (1,035)
FY26 (year ended March 2026, consolidated) 1,024 (699)

Asset quality tracks the same arc. Standalone gross non-performing assets rose from 1.43% in March 2024 to 4.85% in March 2025, with net non-performing assets rising from 0.29% to 0.96% over the same period, according to India Ratings. By June 2026, consolidated gross non-performing assets had improved to 3.64% and net non-performing assets to 0.68%, with a provision coverage ratio of about 81%, per the company’s Q1FY27 disclosures.

Where the money comes from

Spandana has spent the past several years deliberately reducing how much of its book sits in any one state, after concentration made the 2010 Andhra Pradesh crisis so damaging:

The surprise is less about which states dominate than about how little concentration has actually fallen in absolute risk terms: even after years of deliberate diversification, three states still account for roughly two in every five rupees Spandana has lent, and its founding state, Andhra Pradesh, the one that nearly ended the company in 2010, remains inside the current top five.

The risks

The takeaway

Spandana’s history argues against reading any single year of microfinance results, good or bad, as the steady state. A company can post its best-ever profit and its worst-ever loss eighteen months apart without changing its underlying business at all; what changed was borrower leverage and collection discipline across an entire lending cycle, factors that sit mostly outside any one lender’s control once its loan book is large enough to be a proxy for the sector. The lesson that carries beyond microfinance is that a lending business’s real risk shows up in the credit cycle, not the income statement of any single quarter, and a management team’s job is to have already reduced concentration and tightened underwriting before the cycle turns, not after.

Frequently asked questions

Is Spandana Sphoorty Financial a listed company?

Yes. Its shares have traded on the NSE and BSE since 19 August 2019 under the ticker SPANDANA, following an IPO priced at ₹856 per share.

Who founded Spandana Sphoorty Financial and when?

Padmaja Reddy Gangireddy founded it in 1998 in Guntur, Andhra Pradesh, initially as an NGO called SRUDO, before it was incorporated as a financial company in March 2003.

Why did Spandana Sphoorty report a loss in FY25 and FY26?

A sharp rise in bad loans across the microfinance sector, driven by borrower overleveraging, state-level regulatory action such as Karnataka’s 2025 ordinance, and loan-waiver movements, pushed Spandana’s credit costs and non-performing assets up sharply, turning a ₹501 crore FY24 profit into a ₹1,035 crore FY25 loss and a further ₹699 crore consolidated loss in FY26.

Who runs Spandana Sphoorty Financial now?

Venkatesh Krishnan was appointed Managing Director and Chief Executive Officer effective 27 November 2025 for a three-year term, succeeding Shalabh Saxena, who resigned in April 2025. Dipali Hemant Sheth was appointed Non-Executive Chairperson on 23 July 2026.

What is Spandana Sphoorty Financial’s market value today?

Its market capitalisation stood at approximately ₹1,782 crore as of 25 September 2026, according to Sharekhan’s live market data, making it a small-cap NBFC on Indian exchanges.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

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