Arihant Capital has given Accumulate recommendation for Manappuram Finance with a target price of Rs. 118 in its research report issued on May 19, 2022

Arihant Capital’s research report on Manappuram Finance

Manappuram Finance (MFL) reported subdued performance during Q4FY22 with profit de-growth of 44% YoY to INR 261 cr was lower than our estimate of INR 302 cr, impacted due to 45% QoQ rise in provisions. AUM of the company grew by 11% YoY while it declined marginally by 0.5% QoQ to INR 30,261 cr. Gold loan AUM witnessed further 1.4% QoQ reduction due to decline in tonnage growth and further compression in yield. Yield on advances of the company declined further from 20.3% in Q3FY22 to 18.8% as on Q4FY22. Operating performance of the company was impacted due to lower NII growth and decline in margins. Asset quality of the company deteriorated as GNPA (in standalone entity) increased sharply from 1.4% to 3% on a sequential basis due to impact of RBI’s circular on NPA.

Outlook

We lower our target multiple and downgrade our rating on the stock from Buy to Accumulate with a revised target price of INR 118 (INR 160 earlier), based on 0.9x FY24E ABVPS.

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