Manappuram Finance (MGFL) reported a ~6% QoQ growth in gold AUM to ~INR198b in 4QFY23 after recording two consecutive quarters of gold AUM decline in each of 2Q/3QFY23. Gold AUM declined 2% YoY in FY23. While optically, there was a ~150bp QoQ decline to 21% in the reported gold loan yields, it was because of the rise in gold loan tenors to six months from three months. The component of overdue interest was much lower in 4QFY23. Management shared that the overdue interest component has started actualizing from Apr’23 onwards and that gold loan yields as on end-Apr’23 had already recovered to 21.4%. It guided for gold loan yields to recover to ~22% by end-Jun’23.
OutlookValuation at 0.7x FY25E P/BV reflects the recent concerns around the impact of the ED investigation and the muted gold loan growth expectations. Reiterate BUY with a TP of INR150 (based on 1.0x FY25E consolidated BVPS).
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