Arihant Capital has given Accumulate recommendation for Manappuram Finance with a target price of Rs. 197 in its research report issued on May 27, 2021

Arihant Capital’s research report on Manappuram Finance

Manappuram Finance’s (MFL) Q4FY21 result was ahead of our estimates with reported PAT at Rs 468 cr vs. our estimate of Rs 417 cr led by healthy operating performance. Core portfolio of the company slowed down sequentially but remained healthy. NII for the quarter grew by 7% YoY/1% QoQ to Rs 1,098 cr vs our estimate of Rs 1,037 cr, led by 8% YoY growth in the consolidated AUM and stable margins. Operating profit for the quarter grew by 11% YoY to Rs 729 cr vs our estimate of Rs 719 cr, driven by healthy NII growth and controlled OPEX. Provision for the quarter stood at Rs 107 cr (+33% QoQ). GNPA ratio in the standalone entity increased to 1.9% from 1.3% in Q3FY21 while GNPA in microfinance entity stood stable at 2.5%. Collection efficiency (CE) in microfinance segment stood at 101% for the month of Mar’21 (Apr’21 CE was lower by 7-8%).

Outlook

We maintain our Buy rating on the stock with a revised target price of Rs 197 (Rs 199 earlier), based on 1.5x FY23E P/ABV.

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