Buy Manappuram Finance; target of Rs 305: ICICI Securities

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ICICI Securities's research report on Manappuram Finance

We put Manappuram Finance (Manappuram) in this framework to upgrade the stock, from Hold, to BUY. We find future prospect promising with a new strategic direction for the business, which entails new management, lower MFI mix, better asset quality management and high growth and low yield in core gold business. This alone could be countered with the argument of a weak track record. For example, the company did try low yield in gold loans in FY22/FY23 when yields plummeted ~457bps between FY20–23; also, MFI has gone through a cycle with mix at highs of 26% in FY24 and lows of 13% in Q1FY26. However, looking at its overall attractive valuations (standalone valuations: ~1.7x FY27E P/B; the worst is behind for MFI), the equation tips in favour of Manappuram.

Outlook

Upgrade from Hold to BUY Our SoTP-based target price for Manappuram stands at INR 305 (earlier INR 260), based on 1.7x (earlier 1.5x) P/B for standalone business, 1x (unchanged) P/B for MFI and 1x (earlier 1.1x) P/B for home finance/other business on FY27E BV.

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