Manappuram Finance - Clarifications Appear Plausible; Stock Trades Attractive: Motilal Oswal

Motilal Oswal Report

We attended the conference call hosted by Manappuram Finance Ltd. to share an update on the recent developments and provide clarity to investors/analysts on the sequence of events, any impact on Manappuram Finance and the expected outcomes.

We highlight the key takeaways from the conference call below and delve deeper into the specific nuances later in this report:

• Mr. Nandakumar, Managing Director and Chief Executive Officer, Manappuram Finance, clarified that the recent Enforcement Directorate investigation was in connection with a decade-old case related to Manappuram Argo Farms, which was a proprietorship of Mr. Nandakumar. The ED has not made any observations in its order with regards to Manappuram Finance and there are no related-party transactions or any inter-corporate borrowings between the group companies.

• The 2012 case pertaining to Manappuram Argo Farms was settled by Mr. Nandakumar by returning the money to depositors through an escrow account and the latest inspection report from the Reserve Bank of India suggests that only ~Rs 924,000 was outstanding in the escrow account pending receipt of claims.

• Management stated that these developments should not impact the lending operations of Manappuram Argo Farms and its subsidiaries. Further, the company has proactively communicated the developments to its lenders and does not foresee any impact on its ability to raise liabilities. It has sufficient liquidity of ~Rs 10 billion and undrawn lines of ~Rs 33 billion for liability repayments and supporting growth.

• Separately, Mr. Nandakumar has hired a legal counsel and shared that his legal counsel is confident of obtaining a stay on the ongoing ED investigations and getting a release of the assets that have been frozen.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.