Manappuram Finance - Non-Gold Businesses Appear Promising If Executed Well: Motilal Oswal

Motilal Oswal Report

To mitigate the cyclicality in the gold loan segment, Manappuram Finance Ltd. has been actively diversifying into non-gold segments, with the share of non-gold products in the company's assets under management mix at 47% (versus 37% YoY).

Manappuram Finance presented its non-gold businesses have successfully navigated Covid and have reverted to pre-Covid business level. It also exhibited its readiness to deliver healthy assets under management growth and profitability in its non-gold businesses.

The management has stated that it will not pursue loan growth at the cost of a compression in spreads, which we believe will continue to be a driver for higher profitability.

Manappuram Finance trades at 1.0 times Sep-25E price/book value and we believe that there is a scope for a re-rating in valuation multiples for a franchise that can deliver a sustainable return on equity of ~20%.

Risk-reward for Manappuram Finance is favorable and we maintain our 'Buy' rating with a revised target price of Rs 205 (based on 1.2 times Sep-25E consolidated book value per share).

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