Manappuram Finance Q2 Results Review - Rising Delinquencies A Concern, PAT Inline: Dolat Capital

Dolat Capital Report

Manappuram Finance Ltd. reported in line profitability metrics, as contained opex and low provision coverage ratio reduced volatility in earnings despite a sharp rise in non-performing asset across segments.

Although credit costs across standalone and consolidated books have increased versus FY24 (at 67/210 bps versus 40/150 bps in FY24), PCR remains much lower than industry across portfolios (~13% PCR in standalone MFL including VEF/MSME).

Gold loan growth moderated to 3% QoQ, while consolidated AUM grew by 2% QoQ led by a slowdown in MFI, MSME, and on-lending portfolios. A sharp rise in delinquencies across non-gold portfolios (including secured assets like home loan/vehicle/micro, small and medium enterprise constituting 21% of AUM) remains an area of concern.

We factor in 90-100 bps of credit costs for standalone business versus 75-80 bps earlier, along with slight moderation in growth. With 5- 7% downward revision in earnings (standalone book) and moderation in valuation multiples, we maintain our ‘Reduce’ rating with a revised target price of Rs 170 (Rs 215 earlier). The impact of embargo on Asirvad book will reflect in subsequent quarters

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