Manappuram Finance rallies 3% post robust Q4 results

Shares of Manappuram Finance Limited rallied 3 percent in early trade post robust Q4 results. At 9:40 am the Manappuram Finance shares were trading 2.23 percent higher at Rs 112.45 on NSE.

Manappuram Finance on May 12, 2023, reported a 58 per cent jump in consolidated net profit at Rs 413 crore for the quarter-ending March against Rs 261 crore a year ago. The company’s Board has announced an interim dividend of Rs 0.75 per equity share at the face value of Rs 2 each.

The total revenue of the Kerala-based NBFC stood at Rs 1,771 crore, rising 19 per cent compared to Rs 1,481 crore in the year-ago period. The company’s pre-tax profit from the gold loan business, which accounts for three-fourth of its total profit, increased 16 per cent to Rs 422 crore. Meanwhile, its micro-finance division posted a pre-tax profit of Rs 144 crore, versus a year-ago loss.

Also Read | Mannapuram Finance MD secures stay on ED probe into money laundering charges

However, Manappuram’s gold loan assets under management declined 2 per cent year-on-year as higher gold prices meant borrowers needed lower collateral to borrow money. Its gold loan customer portfolio increased 0.4 per cent year-on-year.

Brokerage Views

CLSA has given a buy rating for Manappuram Finance with a target of Rs 140 per share. Weak Q4FY23 with profit after tax missing estimates by 5 percent will drive the share price. The miss was driven entirely by a net interest margin (NII) of 8 percent. Management attributed this to a reduction in gold loan yields driven by loan tenure extensions after 2 quarters of a decline in gold loans, Manappuram delivered 6 percent sequential growth. Regarding the recent ED investigation, the management said that the high court has issued a stay order.

BofA has given a target of Rs 143 per share for Manappuram Finance. Earnings according to the firm are in line with expectations backed by strong FY24, improving non-gold profitability and growth. The company has stated that the high court has stayed ED’s executive order in Friday’s hearing and the company is confident of getting it quashed over coming hearings.

Morgan Stanley has given an overweight rating on Manappuram Finance with a target price of Rs 160 per share. The loan growth shown by the company was a positive surprise. Gold loan yields were lower due to shift to long tenor loans, this should recover gradually as per management. Asset quality and Asirvad’s results were strong according to the brokerage firm.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.