Spandana Sphoorty Financial Limited (SSFL) has had its credit rating reaffirmed at CARE BBB+ (Stable) for existing instruments and assigned for new instruments by CARE Ratings Limited. The rating for Long Term Bank Facilities of ₹800 crore has been reaffirmed, and a new rating has been assigned for Non-Convertible Debentures of ₹280 crore. Ratings for Non-Convertible Debentures totaling ₹600 crore (₹450 crore and ₹150 crore) have been reaffirmed, with the former reduced from ₹500 crore and the latter from ₹200 crore. The Commercial Paper rating of ₹100 crore has also been reaffirmed at CARE A2. CARE Ratings noted that SSFL's adequate capitalization profile, with a CRAR of 36.5% and gearing of 2.1x as of September 30, 2025, supports the ratings. The company also possesses on-balance sheet liquidity of ₹1,179 crore. However, the ratings are constrained by weak profitability, with a net loss of ₹609 crore in H1FY2026 compared to ₹161 crore in H1FY2025, and deteriorated asset quality with Stage 2 and Stage 3 assets at 10.3%. The company also experienced a decline in its scale of operations by approximately 61% year-on-year in H1FY2026. SSFL is currently in breach of some financial covenants on borrowings totaling ₹306 crore. While waivers have been granted for a significant portion, some debenture holders have exercised early redemption. The company has also seen changes in senior and middle-level management and an elevated attrition rate at the ground level. Simultaneously, CARE Ratings has withdrawn the outstanding ratings for Non-Convertible Debentures with ISIN INE572J07737 and INE572J07737 R1 due to full redemption. The outlook for the long-term rating remains Stable, with expectations of gradual scaling up of operations and improvement in earnings profile while maintaining adequate capitalization and liquidity.