Geojit Financial Services research report on Manappuram Finance
Manappuram Finance Ltd. (MGFL) is one of the leading gold loan NBFCs in India. MGFL has also diversified into other business segments like housing loan, vehicle loan and microfinance, with a branch network size of around 5,000 spread across the country. MGFL's total AUM grew 17% YoY to Rs. 45,716cr, with gold loan AUM rising to Rs. 24,365cr (+17% YoY) in Q2 FY25. Asirvad, MGFL's microfinance subsidiary, shows 11% YoY AUM increase to Rs. 12,149cr (including Rs.1,179cr Gold AUM), making up ~25% of the consolidated AUM. As of October 21, 2024, the RBI has halted Asirvad's operations, allowing only servicing of existing customers and collections. In addition to microfinance, Asirvad operates 500 plus gold loan branches, which will be affected by this ban. MGFL reported a Net Interest Income (NII) of Rs. 1,635cr, reflecting a 20% YoY growth. However, the PAT growth was muted at Rs. 572cr (+2% YoY), primarily due to a 117% increase in credit costs.
Outlook
Given these medium-term pressures and the ongoing ban on Asirvad, we are downgrading our rating to 'SELL' with a target price of Rs.152, based on a 0.9x adjusted BVPS of.
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