Credit Rating

Ref: SSFL/Stock Exchange/2026-27/068 October 07, 2026 To To BSE Limited, National Stock Exchange of India Limited, Department of Corporate Services Listing Department P. J. Towers, 25th Floor, Exchange Plaza, C-1, Block G Dalal Street, Bandra Kurla Complex, Bandra (E) Mumbai – 400001 Mumbai – 400051 Scrip Code: 542759 and 890221 Symbol: SPANDANA and SSFLPP Dear Sir/Madam, Subject: Intimation of Credit Rating - Revision of rating outlook and reaffirmation of rating for NCDs and Bank loans of the Company by India Ratings and Research Private Limited. Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform that India Ratings and Research Private Limited has revised its rating outlook to ‘Stable’ and reaffirmed the rating at ‘IND BBB+’ as detailed below: Facilities/ Size of Issue (INR S. No. Rating Assigned/Action Instruments Million) Non-Convertible 5,000 IND BBB+/Stable (Affirmed; Outlook Debentures (reduced from 11,200) revised to Stable) 10,000 IND BBB+/ Stable (Affirmed; Outlook 2. Bank Loans (reduced from 15,000) revised to Stable) Please find enclosed rationale as published by India Ratings and Research Private Limited on October 07, 2026. Kindly take the same on record. Thanking You. Yours Sincerely, For Spandana Sphoorty Financial Limited Vinay Prakash Tripathi Company Secretary Encl: as above Spandana Sphoorty Financial Limited CIN - L65929TG2003PLC040648 Galaxy, Wing B, 16th Floor, Plot No.1, Sy No 83/1, Hyderabad Knowledge City, TSIIC, Raidurg Panmaktha, Hyderabad – 500081, Telangana Ph: +9140-48126666 | contact@spandanasphoorty.com | www.spandanasphoorty.com India Ratings Revised Outlook on Spandana Sphoorty Financial’s NCDs and Bank Loans to Stable; Affirms at ‘IND BBB+’ Oct 07, 2026 | Spandana Sphoorty Financial Limited | Microfinance Institutions India Ratings and Research (Ind-Ra) has revised the Outlook on Spandana Sphoorty Financial Limited’s (Spandana) non- convertible debentures (NCDs) and bank facilities while affirming the rating on them at ‘IND BBB+’ as follows: Details of Instruments Size of Rating Regulator of Date of Coupon Maturity Rating Instrument Type Issue (INR Assigned with Instrument Issuance Rate Date Action million) Outlook/Watch 5,000 Affirmed; Non- Refer ISIN (reduced IND Outlook convertible - - - annexure from BBB+/Stable revised to debentures* 11,200) Stable 10,000 Affirmed; Bank loan (reduced IND Outlook RBI - - - facilities from BBB+/Stable revised to 15,000) Stable *Details in annexure Analytical Approach Ind-Ra continues to fully consolidate Spandana’s 100% subsidiaries Criss Financial Limited (debt rated at ‘IND BBB’/Positive) and Caspian Financial Services Limited, to arrive at the rating, due to the strategic and operational linkages among them. Detailed Rationale of the Rating Action The rating affirmation and Outlook revision to Stable reflect stabilisation in Spandana's credit profile from 2HFY26 following a period of significant stress during FY25 and 1HFY26. The Outlook revision further reflects an improvement in the entity’s asset quality indicators in 1QFY27 and stronger collection efficiency in the portfolio originated under the revised underwriting framework following the adoption of the Self-Regulatory Organisation guardrails for microfinance lenders in 1QFY26. Moreover, the company has demonstrated profitability from 4QFY26 after reporting significant losses in FY25 and 9MFY26. While profitability remained weak due to a sharp contraction in the loan book and consequent deterioration in operating efficiency in FY25 and FY26, Ind-Ra expects the resumption of disbursement growth from 2HFY26 to support a gradual improvement in earnings through better operating leverage and lower incremental credit costs. Furthermore, the company's capitalisation profile remains comfortable, supported by moderate leverage levels and the capital infusion through the rights issue. The rating is however constrained by the company's relatively elevated cost of borrowings compared to similarly rated peers. It also reflects the structural risks inherent in the microfinance sector, including the unsecured nature of the portfolio, the sensitivity of the borrower segment to external disruptions, the potential for socio-political interventions and evolving regulatory requirements. Ind-Ra notes the proposed merger of Criss Financial Limited (CFL) with the company, which has received board approval and remains subject to the requisite approvals. However, as the company's credit profile is already assessed on a consolidated basis, the proposed merger is not expected to materially alter the overall credit assessment. List of Key Rating Drivers Strengths Healthy capitalisation profile Improving asset quality indicators Geographically diversified portfolio Weaknesses Modest profitability profile Scope to strengthen funding profile Risks associated with microfinance business Detailed Description of Key Rating Drivers Healthy Capitalisation Profile: Spandana maintain a healthy capitalisation profile, with a consolidated net worth (adjusted for deferred tax assets, intangibles and goodwill) of INR14,218.4 million as of 1QFY27 (FY26: INR14,062.7 million; FY25: INR21,378.8 million; FY24: INR34,898.0 million). While the net worth witnessed significant erosion due to the losses incurred during FY25 and FY26, the moderation in the scale of operations during the period helped maintain comfortable capital adequacy. Accordingly, the standalone capital adequacy ratio at 28.6% as of 1QFY27 (FY26: 29.8%; FY25: 36.3%; FY24: 32.0%) remained well above the regulatory minimum requirement of 15%, supported by periodic equity infusions. The consolidated capital-to-risk weighted assets ratio (CRAR) stood at 33.8% as of 1QFY27 (FY26: 35.9%; FY25: 37.1%), while consolidated leverage (outstanding debt-to-tangible net worth) was 3.0x (2.8x; 2.6x; 2.7x). The capitalisation profile was further supported by the infusion of INR2,000 million through a partly paid rights issue in August 2025, raised from promoters and institutional investors, against the total issue size of INR4,000 million, with the balance amount received in 2QFY27. Improving Asset Quality Indicators: Spandana's asset quality has improved following significant stress between FY25 and 1HFY26, driven by borrower over-indebtedness, elevated field staff attrition, and sociopolitical disruptions. The company had undertaken sizeable write-offs of INR16,176 million in FY25 and INR13,348.9 million in FY26 on a consolidated basis, resulting in its asset under maintenance (AUM) moderating to INR39,480 million as of December 2025 from peak levels of INR119,730 million as of March 2024. Subsequently, with the easing of asset quality pressures and a recovery in business momentum, AUM increased to INR48,870 million as of June 2026. The company undertaken a comprehensive strengthening of its credit underwriting framework by implementing industry guardrails for microfinance lenders, aimed at improving portfolio quality and curbing fresh stress. This has significantly enhanced the quality of Spandana's incremental originations from 2QFY26. As of June 2026, around 91% of the AUM comprised loans originated under the revised underwriting framework, with 99.2% of such accounts remaining current. Reflecting the success of these corrective measures, monthly collection efficiency (collections as a percentage of current month's demand) improved to 95.9% in 1QFY27 (1QFY26: 90.6%). Furthermore, the proportion of borrowers with exposure to over three microfinance lenders reduced sharply to 3.7% as of June 2026 (July 2025: 18.0%), indicating lower borrower leverage. On a standalone basis, the company's 0+ days par due (dpd) and 30+dpd moderated to 4.6% and 4.2%, respectively, as of June 2026 and 5.8% and 5.6% as of March 2026 from 18.4% and 15.4% as of June 2025. The consolidated 0+dpd and 30+dpd moderated to 4.9% and 4. [Showing first 8,000 characters — download PDF for full document]