Spandana Sphoorty financial rating downgraded to BBB+ (stable)

Spandana Sphoorty Financial Limited (SSFL) announced on August 29, 2025, that CARE Ratings Limited has downgraded the company's credit rating to CARE BBB+ (Stable) for its existing instruments. This downgrade affects Long Term Bank Facilities (INR 800.00 crore), Non-Convertible Debentures (INR 500.00 crore and INR 200.00 crore), all downgraded from CARE A- (Stable). Commercial Paper was downgraded to CARE A2 from CARE A2+.

The downgrade reflects SSFL's weaker-than-expected profitability and asset quality in Q1 FY2026, with a reported net loss of INR 360 crore and elevated stage 2 and stage 3 assets at 13.4% as of June 30, 2025, after writing off INR 642 crore. The company also experienced a ~27% degrowth in its scale of operations during Q1 FY2026.

Despite these challenges, SSFL maintains an adequate capitalisation profile, with a total capital to risk-weighted assets ratio (CRAR) of 40.8% and gearing of 2.6x as of June 30, 2025. The company also raised approximately INR 200 crore in August 2025 through a rights issue, with an additional INR 200 crore planned by March 2027. Liquidity remains adequate, with an on-balance sheet liquidity of INR 1,731 crore as of June 30, 2025.