Manappuram Finance Q2 Review: Dolat Capital Maintains 'Reduce' But Hikes Target Price — Here's Why

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Dolat Capital Report

With Bain’s joint control, Manappuram Finance Ltd. stands to benefit from professional management and increase agility in the gold loan business (lost market share to NBFCs in recent years).

Near-term pain from higher provisions, both led by improvement in provision coverage ratio (much lower vs peers) and possible stress recognition, could continue.

While increased focus on gold loan book is positive, sharp moderation in yields will be detrimental to profitability over time, with RoAs settling ~160 bps lower vs earlier (sub 4%).

We maintain a ‘Reduce’ rating.

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