YES Securities is bullish on Manappuram Finance has recommended buy rating on the stock with a target price of Rs 165 in its research report dated May 14, 2020.
YES Securities' research report on Manappuram Finance
On expected lines, Manappuram delivered strong results for Q4 FY20 with buoyancy in gold prices. AUM grew 5% qoq/30% yoy, while PPOP grew much faster at 11% qoq/55% yoy aided by operating leverage. Portfolio accretion in the mainstay Gold Loans (67% of consol. AUM) remained strong (grew 4.5% qoq/31% yoy), and was largely driven by higher gold prices (gold holdings declined 1.5% qoq and grew by modest 7% yoy). Growth in customer base remains anemic. Weighted average LTV of GL portfolio stood at <60%, based on past 30-day avg. price. Share of online portfolio increased to 48% due to restricted movement/lockdown in March. It has further increased to 61% currently. Very few GL customers opted for moratorium and uncollected interest levels remain largely unchanged (~1.5 months) with collection through online channel.
Retain BUY rating with a 12m TP of Rs165. Robust profitability in GL business (RoA of 6.5%+) to mitigate Covid impact on other loan segments. Overall RoA/RoE delivery to be resilient in FY21/22.
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