SKS Micro-finance is taking baby steps to the green line. Know why

SKS Microfinance Ltd., India's largest distributor of small loans, rose more than 3.2 percent as global brokerage UBS upgraded its price target on the stock to `650 from `600 following a stellar first quarter performance.

SKS Micro said its first quarter Net Profit surged 24 percent to 61.2 crore rupees from 49.3 crore rupees in the same quarter a year ago. Its Net Interest Income leapt 50 percent to 143 crore rupees during the April-June quarter versus 96 crore rupees in the year ago quarter. Several other financial parameters showed strong traction.

UBS said in a note to clients SKS has a rising share of long term loans to support future growth and that augurs well for earnings. UBS raised estimates by 9.3 percent and expects EPS growth of 46 percent CAGR.

SKS Micro jumped 17.4 rupees to 554 on the National Stock Exchange where 29.7 lakh shares were traded in the first 3 hours of trade compared with a 5-day average of 12.7 lakh shares. Its futures were the top gainers in the NBFC segment.

SKS' market capitalisation has doubled to 7,000 crores over one year as investors latched on to a growing loans' portfolio.

(Image credit: Indiatimes)