SKS Microfinance Ltd' s scrip touched the upper circuit limit by gaining 20 per cent on the Bombay Stock Exchange on Thursday.
Starting the day at Rs 333.50, the Hyderabad-based company shot up after the Government mooted a draft Microfinance Bill, and closed at Rs 411.
According to the Government proposal, the Micro Financial Sector (Development and Regulation) Bill, 2011, seeks to make it mandatory for all microfinance institutions to be registered with the Reserve Bank, making it the sector regulator.
SKS was battling a declining script since October 2010 after the Andhra Pradesh Government had brought in a regulation to control MFIs in the State in the wake of allegations of excesses by recovery agents and high interest rates.
“However, there are many concerns that can impact SKS's business in Andhra Pradesh, affecting the topline and bottom-line,” an analyst said. The uncertainty with regard to about Rs 1,000 crore of outstanding loans in the State and the near-halt of fresh loan disbursals could still impact the company, he added.
A Bloomberg report quoting the JP Morgan Chase & Co report as saying: “The Bill would take microfinance companies outside the auspice of State regulations, averting crackdowns like one in the southern State of Andhra Pradesh last year that saw microfinance lenders' debt collections fall to below 20 per cent.”
According to the audited results, the net profit of the country's only listed MFI for the full year ended March 31, 2011, decreased 35.8 per cent at Rs 111 crore (Rs 174 crore).
It posted a net loss of Rs 70 crore in the fourth quarter ended March 31.
The company had earlier said the loss was the direct impact of provisioning necessitated by the AP MFI Act and the adverse impact could be continuing for one or more quarters.