Manappuram Finance Gets 'Buy' Upgrade From IDBI Capital; Bain Capital Joining As Joint Promoter To Be Positive

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IDBI Capital Report

Manappuram Finance Ltd. announced that Bain Capital will acquire joint control in the company through its affiliates i.e. BC Asia Investments XXV Ltd. and BC Asia Investments XIV Ltd. Bain Capital will invest Rs 43.85 billion to acquire 18% stake on a fully diluted basis via preferential allotment of equity and warrants at a price of Rs 236/share. This would trigger an open offer to purchase additional 18% stake on an expanded capital basis (excluding warrants).

Based on the open offer subscription, Bain Capital’s stake in Manappuram will between 18.0-41.7%, while existing promoters will hold 28.9% stake post investment.

Manappuram has been facing challenges, including market share loss to a major competitor in the gold loan segment and stress in its microfinance (MFI) portfolio. With Bain Capital joining as a joint promoter, the company is well-positioned to revamp its business strategy and regain lost ground in the gold loan industry. However, challenges in the MFI portfolio are expected to persist, in line with broader industry trends.

We upgrade to ‘Buy’ rating with a new target price of Rs 252 (earlier Rs 200), valuing it at 1.2 times price/book value FY27E based on new BV (up 5% FY26 and FY27) post share allotment.

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