Manappuram Finance Q1 Results Review - Gold Loan Growth Guidance Raised; MFI Pain Persists: IDBI Capital

IDBI Capital Report

Manappuram Finance Ltd.’s gold loan portfolio grew by 15% YoY (versus 9% YoY FY24) backed by higher gold prices. Overall AUM growth remains strong at 21% YoY. Management revised the gold loan growth guidance upwards to 15% versus 8-10% earlier.

We estimate 15% assets under management compound annual growth rate (FY24-26) backed by non-gold portfolio. Micro finance reported lower profitability led by increase in provisions. MFI asset quality improved slightly with gross non-performing asset at 3.0% versus 3.7% QoQ led by higher write offs.

Consolidated net interest income grew by 19% YoY led by decline in net interest margins; pre-provision operating profit grew by 22% YoY led by lower operating expenses (up 12% YoY).

Manappuram Finance's profit after tax grew slowly by 12% YoY led by higher provisions (up 89% YoY). We have largely retained the estimates and downgrade to ‘Hold’ rating with a target price of Rs 225, valuing it at 1.2 times price/adjusted book value FY26E as the stock has run up leaving limited upside.

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