Manappuram Finance hits lowest level since March 2020; slips 25% in 1 month

Shares of Manappuram Finance hit an over two-year low of Rs 89.10, down 4.5 per cent on the BSE in Tuesday’s intra-day trade, as investors hammered the stock over growth concerns. Trading volumes on the counter jumped 1.5 times with a combined 9.52 million equity shares changing hands on the NSE and BSE till 02:25 pm. In comparison, the S&P BSE Sensex was down 0.63 per cent at 53,948 level.

The stock of the non banking financial company (NBFC), engaged in gold loan business was trading at its lowest level since March 2020. In the past one month, it has slipped 25 per cent as compared to a 5 per cent decline in the S&P BSE Sensex.

For January-March quarter (Q4FY22), Manappuram Finance reported 44 per cent year on year (YoY) decline in its consolidated net profit at Rs 261 crore due to higher operating expenses. It had posted a profit of Rs 468 crore in the year-ago quarter (Q4FY21).

The company’s net interest income (NII), also, fell 10.2 per cent YoY to Rs 986 crore from Rs 1,098 crore and consolidated asset under management (AUM) declined sequentially to Rs 30,300 crore from Rs 30,400 crore in Q3FY22. The company said that the net profit was affected temporarily due to shift from high yield to lower yield gold loans.

On a standalone basis, the company’s assets quality worsened during the quarter as gross non-performing asset (NPA) and net NPA ratio increased by 160 basis points (bps) and 170 bps quarter on quarter (QoQ) to 3 per cent and 2.7 per cent, respectively.

According to analysts, Manappuram’s gold loan portfolio de-grew by 1.4 per cent QoQ due to competition intensity from NBFCs. MFI reported deterioration in asset quality as GNPA stood at 3.5 per cent vs 2.8 per cent QoQ; also reported loss (Rs 7.1 crore).

“The Management has revised guidance for gold loan growth at 10 per cent (earlier 10-15 per cent) for FY23. We have downgraded estimates (down 7 per cent FY24 EPS); as competition intensity from NBFCs impacts growth prospectus. We need to watch out for recovery in MFI portfolio in FY23,” IDBI Capital said in a result update.

ICICI Securities added that despite the management’s optimism on demand outlook, there are challenges considering the signs of rural slowdown as evident from recent corporate results in many sectors. The weaker than peer growth performance by Manappuram in both gold and MFI segments is further weighing upon the outlook.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor