Motilal Oswal's research report on Manappuram Finance
The RBI has instructed Asirvad Micro Finance, a subsidiary of Manappuram Finance, to halt the sanctioning and disbursement of loans, effective 21st Oct’24. In addition to Asirvad, the RBI has imposed a similar ban on Arohan Financial Services, DMI Finance, and Navi Finserv. The RBI shared that the decision to ban the lending operations of Asirvad stemmed from major supervisory concerns about its pricing practices, particularly the weighted average lending rate and the interest spread over its cost of funds, which was deemed excessively high and not in compliance with the regulations and the Fair Practices Code issued by the RBI.
Outlook
We downgrade the stock to Neutral with a revised TP of INR160 (based on 0.8x Sep’26E P/BV).
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