Manappuram Finance Share Price Declines After Q3 Results, Brokerages Maintain Stable Outlook

Manappuram Finance Ltd.'s share price declined 7.12%, following the release of its third-quarter results. The company reported a significant drop in net profit, though revenue showed modest growth.

Brokerages, while acknowledging the weaker performance, have maintained a stable outlook on the stock, citing various factors influencing their assessments.

Manappuram Finance's Q3 consolidated results showed a 10.1% year-on-year increase in total income, reaching Rs 2,563 crore. However, net profit plummeted by 51% to Rs 282 crore, significantly below the estimated Rs 489 crore. The company also announced an interim dividend of Rs 1 per equity share.

Jefferies maintained a 'hold' rating on Manappuram Finance, with a target price of Rs 205. The brokerage highlighted that the company's Q3 profit missed estimates due to softer net interest income and higher provisions. They noted that asset under management growth also fell short of expectations, and net interest margin declined quarter-on-quarter.

Jefferies expressed concern about the elevated stress in the microfinance institution book, which is expected to weigh on earnings in the near term. While acknowledging the potential benefits from higher gold prices, they pointed out that Manappuram's growth has lagged behind its peers.

CLSA has an 'outperform' rating on Manappuram Finance, with a target price of Rs 194.06. "The stabilisation of Manappuram branch operations, along with healthy gold price appreciation, should support a growth recovery in 4Q, in our view," it said.

CLSA expects the company to deliver 18% gold loan growth in fiscal 2025. The Asirvad book was down 18% QoQ and credit cost was elevated at 17% (annualised).

Increasing cost of funds has dragged the company's spreads. During the quarter, cost of funds went up 6bps, driven by an upward revision in MCLR linked bank borrowings, the brokerage said.

The scrip fell as much as 10% to Rs 174.65 apiece. It maintained the same level as of 11:12 a.m. This compares to a 0.61% decline in the NSE Nifty 50.

It has fallen 4.33% in the last 12 months. Total traded volume so far in the day stood at 3.9 times its 30-day average. Relative strength index was at 35.

Out of 16 analysts tracking the company, eight maintain a 'buy' rating, six recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 10%.