Motilal Oswal's research report on Manappuram Finance
RBI, in its Press Release dated 8th Jan’25, shared that it has lifted the supervisory restrictions on Asirvad Micro Finance, a subsidiary of Manappuram Finance (MGFL), with immediate effect. Earlier, on 21st Oct’24, RBI had directed Asirvad to halt the sanctioning and disbursement of loans. With this ban now lifted, Asirvad can resume both its MFI and gold loan business. The regulator stated that Asirvad initiated remedial actions and submitted various compliances to RBI. In view of the company’s adoption of revamped processes and systems, as well as its commitment to ensuring adherence to regulatory guidelines on a regulatory basis, Asirvad was able to make the necessary changes to RBI’s satisfaction. Additionally, the company has committed to ensuring fairness in loan pricing.
Outlook
However, we foresee risks of spread compression in its gold loan business, as the company has started focusing on slightly higher ticket size gold loans. We maintain a Neutral rating on MGFL with a TP of INR205 (based on 1.0x Sep’26E P/BV).
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