ESAF SFB Share Price Surges Over 11% in Biggest One-Day Jump in 16 Months

Market Performance

In a striking turnaround, ESAF SFB share price witnessed a major rally of 11.5% on Thursday, reaching ₹34 per share. This marks the bank's most significant intraday gain since February 2024, showcasing renewed investor interest.

Main News: Board Approves ₹735 Cr Stressed Asset Sale

The surge in share price followed ESAF Small Finance Bank's (ESFB) disclosure that its Board of Directors had approved the sale of a stressed asset pool worth ₹735.18 Crore to an Asset Reconstruction Company (ARC).

Key Details of the Stressed Asset Sale:

• Non-performing assets (NPAs): ₹362.43 Crore
• Technically written-off loans: ₹372.75 Crore
• Provision Coverage Ratio: 90.15%

The board also authorized its Asset Sale Committee to oversee and execute all procedural formalities related to this transaction.

"The Board of Directors has authorized the Asset Sale Committee of Executives to complete the procedural requirement with respect to the sale of NPA and technically written-off loans to ARC," stated the company.

Company Details

Strategic Business Shift in FY25

In FY25, ESAF SFB initiated a significant shift in its business approach, focusing more on secured and retail segments and moving away from its reliance on unsecured microloans. This move aligns with the bank's ongoing efforts to improve asset quality and stabilize earnings.

IPO & Listing Milestone:

• Stock Market Debut: November 10, 2023
• Issue Price: ₹60 per share
• Listing Price: ₹69 per share (15.1% premium)
• Funds Raised via IPO: ₹390 Crore
  • Included fresh issue and OFS component

Financial Performance Snapshot: Q4 FY25

Despite the strategic transition, the bank faced headwinds during the March quarter (Q4 FY25):

Revenue & Profitability

• Net Interest Income (NII): ₹436 Crore

(vs ₹591 Crore in Q4 FY24)

• Net Loss: ₹183 Crore

Provisions

• Total Provisions: ₹332 Crore
  • ₹131 Crore was made over and above standard policy norms
  • Primarily due to stress in the microloan portfolio

Key Ratios

• Net Interest Margin (NIM): 8.08%
• Net NPA: 2.9%

These numbers reflect the continued pressure from microfinance-related stress but also indicate the bank's proactive approach to handling bad loans.

Summary of the Article

The 11.5% jump in ESAF SFB's share price underscores market optimism following the bank's announcement of a significant asset sale to clean up its balance sheet. With a high provision coverage of over 90% and a shift toward more secured retail lending, ESAF SFB is restructuring its business . The financials from Q4 FY25 reveal the short-term impact of provisioning.