Arihant Capital recommended accumulate rating on Manappuram Finance with a target price of Rs 184 in its research report dated July 31, 2020.
Arihant Capital 's research report on Manappuram Finance
Manappuram Finance (MFL) reported weak performance in terms of asset quality and growth front, led by its non-gold business. However, operating performance of the Company remained healthy. Gold loan business of the Company continued to remain strong. NII for the quarter grew by 19% YoY to Rs 946 cr, led by 26% YoY growth in consolidated AUM. Healthy NII growth and cost optimization bolstered operating profit growth at 41% YoY to Rs 638 cr. Cost to Income ratio came down by 384 bps QoQ to 32.9%. Profit during the quarter increased by 35% YoY to Rs 368 cr, but it has declined by 8% QoQ, due to 19% QoQ increase in provisions at Rs 145 cr. GNPA ratio increased to 1.3% from 0.9% in Q4FY20.
We value the stock at 1.8x P/ABV to its FY22E ABV of Rs 102 and arrive at a fair value of Rs 184 per share. We downgrade our rating to Accumulate from Buy.
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