IndudInd Bank may buy 1k Cr. NPAs of Spandana

IndusInd Bank may buy out Rs. 1,000 crore worth non performing assets (NPA) of the ailing micro lender Spandana Spoorthy Financial. According to media reports the Hinduja Group's private bank is looking to buy Spandana's preferential shares worth Rs. 780 crore which are held by consortium of banks.

Mrs. Padmaja Reddy promoted Spandana Spoorty Financial Ltd., is one of the largest MFI in the world and has support of leading financial institutions in India. Spandana engages in giving small loans to women. 

Spandana, in 2010, had allotted optionally convertible cumulative redeemable preference shares (OCCRPS) to its lenders for around Rs. 1,000 crore due to failure of repayment of debt to its lenders.

The MFI sector today is on a steady growth trajectory and the sector has grown by almost 84 per cent in last fiscal. IndusInd Bank may buy the loan portfolio at a discount and may collect the receivables directly from the borrowers and try to make some good bargain for itself. 

IndusInd Bank has been the top pick in the private banking space for several Mid-cap funds and for investors looking to take exposure in the private banking space. 52 w high for the stock is at 1132 and is trading at a P/E multiple of 28.55. The market cap for the stock is  65,284 crores and the stock has generated 30 per cent returns in a 1 year period. On Tuesday the stock is trading negative at Rs. 1096 per share, down by 0.64 per cent at 10.15 am. 

Sensex is down by 0.20 per cent at 26,807 on an intra-day basis.