Neutral Manappuram Finance; target of Rs 240: Motilal Oswal

Motilal Oswal's research report on Manappuram Finance

Bain Capital will invest ~INR43.85b in MGFL to acquire ~18% stake on a fully diluted basis through a preferential allotment of equity shares and warrants at INR236/share (~30% above the six-month average trading price and ~9% higher than the CMP). The transaction will trigger a mandatory open offer for the purchase of an additional ~26% stake in the company on an expanded capital basis (excluding warrants). The open offer price has been fixed at INR236/share. After the completion of this transaction, Bain Capital will acquire ~18%- 41.7% stake in the company on a fully diluted basis, depending on the open offer uptake. Meanwhile, the stake of existing promoters will decline to 28.9% on a fully diluted basis (from ~35.3% held currently). Following the transaction’s completion, Bain Capital will be classified as a promoter of the company and jointly control MGFL with existing promoters. Additionally, Bain will have the right to materially influence strategic decision-making, at MGFL as the Board will be reconstituted to include two nominee directors of Bain Capital. The transaction is expected to close by 2Q/3QFY26, subject to the receipt of necessary approvals.

Outlook

We maintain our Neutral rating on the stock with a TP of INR240 (based on 1.1x Mar’27E consolidated BVPS).