Manappuram Finance Ltd. share price target

As per World Gold Council, India holds 22,000 tonnes of gold. India accounts for 27.1% of world's jewellery demand and 19.2% of global demand for gold bars and coins. Part of the large appetite for jewellery in India is driven by the cultural role that gold plays in India. Limited access to financial assets means gold has an important parallel status as a store of value. Gold loans in India have been largely concentrated in South India, which holds the largest proportion of India's gold portfolio and is typically...

Manappuram Finance possesses some unique advantages that are allowing it to grow AUM and win market share in the gold loan market

Manappuram Finance (MGFL) reported PAT growth of 205% YoY at Rs 192 cr which was led by healthy NII growth backed by strong advance growth and improvement in NIMs. MGFL, AUM growth for Q2FY17 was at 42% at Rs 14,500 cr, management maintained its guidance to take non gold portfolio to 25% (currently..

Manappuram's Net Income at INR 486cr grew by 59% YoY on the back of 29% growth in AUM. NIMs expanded 370bp YoY / 40bp QoQ as (i) the company suffered severe auction losses in 1QFY16, (ii) company shifted its entire incremental advances towards the three month product which commands a higher yield. Further, lower OPEX growth of 8% aided Pre Provisioning Profits to come in at INR 266cr, an increase of 156% YoY. Provisioning increased from INR 12cr to INR 16cr on YoY basis. Consequently profits grew by a robust 170% to INR 160cr, much above our estimate of INR 128cr. Motilal Oswal value the company at INR 114 (earlier INR 75),maintain BUY.

Revamped the business model to de-risk gold loan business: Post the FY12-14 period, when the gold loan industry faced regulatory challenges coupled with steep decline in gold prices, Manappuram realigned its business model to de-risk it from volatility in gold prices. The...