SKS stock free fall continues, hits all-time low
HYDERABAD: The worst seems to be far from over for city-based SKS Microfinance Ltd as a slew of financial services firms continued to downgrade the company's scrip. This, coupled with the company's poor quarterly performance, led to its free fall on both the bourses ' BSE and NSE ' on Monday.
SKS plunged 19.22 per cent on NSE to hit a lifetime low of Rs 268 per share and closed at Rs 269.05 per share. Similarly, on BSE, SKS closed at Rs 270.80, down 18.26 per cent from the previous close of Rs 331.30, after hitting an all-time low of Rs 268.05. Over 82 lakh shares were traded on the two bourses on Monday.
If it was global financial services firm J P Morgan, which had cut the company's target price by more than half from Rs 550 to Rs 200 due to weakening business model last Friday, three more firms namely Crisil, Kotak Institutional Equities and Credit Suisse joined the list downgrading SKS.
This was primarily due to operational challenges, poor recovery rate in Andhra Pradesh, the single largest market for micro lenders and tighter regulatory norms. As a result, the company's financial performance was hit and it reported a net loss of Rs 69.77 crore for the fourth quarter ended March, 2011 compared with a net profit of Rs 62.89 crore in the corresponding quarter last year.
And on account of lower income from operations and high credit costs, net profit declined 36 per cent to Rs 111.63 crore during FY11 from Rs 173.95 crore achieved in FY10.
While Credit Suisse has downgraded the stock to 'underperform' from 'outperform' and slashed the price target to Rs 323 from Rs 1,575, citing uncertainty, Kotak reduced its price target to Rs 350 from Rs 700 due to concerns over normalization of business in Andhra Pradesh and its inability to recover loans.
Besides, SKS' shrinking loan book, limited access to bank funds, falling efficiency in collections in non-AP markets such as West Bengal and Tamil Nadu, brokerages are raising estimates of further credit losses.
HYDERABAD: The worst seems to be far from over for city-based SKS Microfinance Ltd as a slew of financial services firms continued to downgrade the company's scrip. This, coupled with the company's poor quarterly performance, led to its free fall on both the bourses ' BSE and NSE ' on Monday.
SKS plunged 19.22 per cent on NSE to hit a lifetime low of Rs 268 per share and closed at Rs 269.05 per share. Similarly, on BSE, SKS closed at Rs 270.80, down 18.26 per cent from the previous close of Rs 331.30, after hitting an all-time low of Rs 268.05. Over 82 lakh shares were traded on the two bourses on Monday.
If it was global financial services firm J P Morgan, which had cut the company's target price by more than half from Rs 550 to Rs 200 due to weakening business model last Friday, three more firms namely Crisil, Kotak Institutional Equities and Credit Suisse joined the list downgrading SKS.
This was primarily due to operational challenges, poor recovery rate in Andhra Pradesh, the single largest market for micro lenders and tighter regulatory norms. As a result, the company's financial performance was hit and it reported a net loss of Rs 69.77 crore for the fourth quarter ended March, 2011 compared with a net profit of Rs 62.89 crore in the corresponding quarter last year.
And on account of lower income from operations and high credit costs, net profit declined 36 per cent to Rs 111.63 crore during FY11 from Rs 173.95 crore achieved in FY10.
While Credit Suisse has downgraded the stock to 'underperform' from 'outperform' and slashed the price target to Rs 323 from Rs 1,575, citing uncertainty, Kotak reduced its price target to Rs 350 from Rs 700 due to concerns over normalization of business in Andhra Pradesh and its inability to recover loans.
Besides, SKS' shrinking loan book, limited access to bank funds, falling efficiency in collections in non-AP markets such as West Bengal and Tamil Nadu, brokerages are raising estimates of further credit losses.
News Posted: 10 May, 2011
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