Manappuram Finance Q3 Review: IDBI Capital Maintains 'Hold' On The Stock, Hikes Target Price — Here's Why

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IDBI Capital Report

Manappuram Finance Ltd.’s Gold loan portfolio grew by 18% YoY (versus 17% YoY Q2 FY25) backed by higher gold prices. However, micro finance portfolio declined by 15% YoY (down 17% QoQ) due to RBI ban on Asirvad MFI. Thus, overall AUM growth stood at 10% YoY vs 17% YoY (Q2 FY25).

We revise estimates downward to 11% vs 12% AUM CAGR (FY24-26) earlier due to non-gold portfolio. MFI arm reported loss due to increase in provisions. MFI asset quality deteriorated further with gross non-performing asset at 5.8% vs 4.3% QoQ led by higher slippages. Consolidated net interest income grew by 10% YoY led by lower net interest margins; pre-provision operating profit declined by 1% YoY led by lower other income (down 63% YoY). PAT declined by 52% YoY led by higher provisions (up 2.7x YoY).

We have revised estimates downwards and rolled over to FY27 estimates. We maintain ‘Hold’ rating with a target price of Rs 200 (earlier Rs 176), valuing it at 1.0x P/BV FY27E.

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