ESAF SFB share price jumps over 11% in biggest intraday gain in 16 months. Here’s why

ESAF Small Finance Bank share price in focus: ESAF Small Finance Bank ESFB) witnessed a sharp jump in its share price by 11.5%, hitting ₹34 apiece in Thursday's trading session, marking its most significant intraday gain since February 2024.

The rally came after the bank informed the exchanges that its Board of Directors had approved the sale of a stressed asset pool worth ₹735.18 crore to an Asset Reconstruction Company (ARC).

This pool includes ₹362.43 crore in non-performing assets (NPAs) and ₹372.75 crore in technically written-off loans, with a high provisioning coverage of 90.15%. The move is seen as a step toward balance sheet cleanup and improved asset quality. The board has also authorized the Asset Sale Committee to complete the procedural requirements related to the sale.

"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. We shall separately intimate as and when the aforesaid proposed deal is completed," the company said.

In FY25, the bank made a significant shift in its business strategy, transitioning towards more secured and retail segment.

Bank reported a loss in the March quarter due to higher provisions.

During the March quarter (Q4 FY25), the bank set aside ₹332 crore in provisions, including ₹131 crore over and above the policy norms, due to stress in its microloan portfolio. This led to a net loss of ₹183 crore for the quarter. Net Interest Income (NII) fell to ₹436 crore, down from ₹591 crore in Q4 FY24, as systematic stress in the microlending book continued to weigh on earnings.

The net interest margin (NIM) remained steady at 8.08%, while the bank reported a net NPA of 2.9%.

ESAF Small Finance Bank (ESFB), a scheduled commercial bank, began its operations on March 10, 2017. The company made its stock market debut on November 10, 2023, listing at a 15.1% premium at ₹69 per share versus the issue price of ₹60.

The company raised ₹390 crore through its IPO, comprising a mix of fresh equity issuance and an offer-for-sale (OFS) component.

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