Manappuram Finance shares crack 5% on weaker-than-expected Q3 results

Manappuram Finance’s stock has dropped 8 percent in the past six months

Shares of Manappuram Finance plunged 5 percent to Rs 183 apiece on February 14 after the company reported a weaker-than-expected Q3FY25 performance, weighed down by stress in its microfinance business following a quarter-long loan disbursement ban.

The company’s consolidated net profit halved to Rs 282 crore in Q3FY25, while bad loans and provisions from its microfinance arm surged fourfold to Rs 473 crore.

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The Reserve Bank of India had imposed the ban at the start of the quarter due to “usurious” pricing and excessive mark-ups over funding costs, lifting it only last month. This led to a 5 percent drop in microfinance revenue to Rs 665 crore.

However, Manappuram’s gold loan portfolio, which contributes 75 percent of its total revenue, rose 17 percent, benefiting from record-high gold prices.

The company also declared an interim dividend of Re 1 per share (face value Rs2), with February 21, 2025, set as the record date for eligibility.

Motilal Oswal retained a “neutral” rating with a target price of Rs 215, citing near-term profitability and growth concerns due to microfinance stress and broader macroeconomic weakness.

The brokerage cut its PAT estimates for FY25-27 by up to 15 percent, projecting a 15 percent CAGR in gold AUM and 10 percent growth in consolidated PAT over FY24-27, with RoA/RoE of 4.7 percent and 18 percent, respectively, by FY27.

Manappuram Finance’s stock has dropped 8 percent in the past six months, underperforming the Nifty 50’s 4 percent decline.

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