Manappuram Finance Ltd. share price target

We expect a short-term yield contraction as the company shifts toward secured lending and aims to attract high-ticket clients. The downward revision in earnings forecasts reflects changes in the equity structure. Although the shift in lending strategy may pressure asset quality in the near term, improved employee incentives could aid recoveries and help offset provisioning risks. With the ongoing restructuring and Bain Capital's involvement, we foresee enhancements in process discipline and cost control. Given the short-term stabilization phase, this may take time. We revise our rating to...

The definitive agreement of Bain Capital for joint control of Manappuram Finance is a positive strategic step for the company towards the next phase of growth with a potential transformation of leadership, operational efficiency and control.

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).

We revise our rating from HOLD to BUY on reasonable valuations and expectations of improved profitable growth over the medium term.

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.

Manappuram Finance’s (MGFL) consol. PAT in 2QFY25 grew 2% YoY to INR5.7b (in line). NII grew ~21% YoY to ~INR16.4b and PPoP rose ~19% YoY to ~INR10.3b.

We maintain our HOLD recommendation on the stock.

The RBI has instructed Asirvad Micro Finance, a subsidiary of Manappuram Finance, to halt the sanctioning and disbursement of loans, effective 21st Oct’24.

we cut our AUM growth estimates to ~15% CAGR over FY24-27E vs ~18% CAGR earlier. We also cut our earnings estimates by 7-9% over FY25-27E. That said, the actual financial impact would be largely dependent on the duration of the restrictions.

Manappuram Finance (Manappuram) summarily managed gold loan growth/NIM (~10% Q.Q/14.1%) and non-gold business growth (AUM growth of 3.8% QoQ) well in Q1FY25.

We maintain our BUY recommendation on the stock.

Manappuram Finance (MGFL)’s consol. PAT grew ~12% YoY, but declined ~1% QoQ to ~INR5.6b (in line) in 1QFY25. NII grew ~19% YoY to ~INR15.4b.

We maintain our BUY recommendation on the stock.

Manappuram Finance (MGFL)’s 4QFY24 consol. PAT grew ~36% YoY, but it
dipped 2% QoQ to INR5.6b (5% miss). FY24 PAT rose ~44% YoY to INR21.6b.