Geojit has given Buy recommendation for Manappuram Finance with a target price of Rs. 209 in its research report issued on Nov 29, 2021

Geojit’s research report on Manappuram Finance

Manappuram Finance (MGFL) is one of the leading gold loan NBFCs in India and is well diversified into other business segments like housing loan, vehicle loan and microfinance, with a branch network size of around 4,623 spread across the country • Total AUM grew by 5.6% YoY and 14.8% QoQ as Gold AUM grew 13.2% YoY while Non-Gold AUM grew 18.2% YoY. The growth in AUM was by compromising yield as MFL focused on large ticket and longer tenure gold loan loans which has lower interest rates. Net Interest Income grew by 1.0% YoY while declined 4.1% sequentially due to margin contraction. Management expects 200bps contraction in FY22 margin as the yield is expected to continue low in the coming quarters. During Q2FY22, GNPA/NNPA on standalone basis has improved to 1.6%/1.3% from Q1FY22 level of 2.0%/1.6% . We maintain our Buy rating on the stock with a target price of Rs. 209 based on 1.7x Adj BVPS of FY23E.

Outlook

However, with strong AUM outlook, safe LTV of 67% and comfortable liquidity position, we remain positive on the stock. We value the stock at 1.7x FY23E Adj BVPS and maintain BUY rating with a target price of Rs.209.

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