In a report released on SKS Microfinance, Citigroup has cut the forecasted earnings(EPS) of SKS Microfinance by 41-52% over FY11-13 to factor in reduced lending rates, higher funding costs, lower growth and increasing regulatory risk in the medium term. Citigroup has also downgraded its rating on SKS Microfinance to “sell” from a “hold” and revised it’s target price to Rs 605 for the stock.According to the note released by Citigroup, the current regulatory impasse will most likely have a deep impact on SKS’s earnings, growth and asset quality even if it resolved quickly. “If it prolongs, the impact could be higher, with possibilities of further downsides to the stock”.
The Shares of SKS Microfinances fell by more than 8% yesterday on the back of negative news flow. The stock made a high of Rs 746.00 and touched a low of Rs 651 before closing at Rs 661, down by 8.24 % on the Bombay Stock Exchange.