Manappuram Finance Falls After Q1 Profit Misses Estimates
However, Jefferies said that negatives are already priced in the stock price.
Shares of Manappuram Finance Ltd. fell on Wednesday after the company reported lower than expected net profit for the June quarter. The company reported a 16% year-on-year increase in its net profit to Rs 441 crore during the period, but it fell short of Bloomberg's expectations of Rs 474 crore.
Manappuram Finance Q1 Result: Highlights (Consolidated, YoY)
Total income up 20% to Rs 1,622 crore.
Net profit up 16% at Rs 441 crore. (Bloomberg estimate: Rs 474 crore).
Jefferies maintained a 'buy' rating and a target price of Rs 270, implying a 30.6% upside. It said that while elevated stress in microfinance and non-gold segments was an issue, these were largely priced in.
"Better gold loan growth and a reduction in stress in the MFI portfolio could lift valuation multiples," it said.
Nirmal Bang, which also has a 'buy' rating for the stock, raised the target price to Rs 248 from Rs 242 earlier. It said it was positive about the company’s prospects as a diversified lender, but successful execution would be key. "Besides this, the timely listing of the sizeable subsidiary, Asirvad Micro Finance, will be crucial for the re-rating of the parent," it added.
Though it maintained its target price of Rs 225, IDBI Capital reduced the stock's rating to 'hold', citing limited upside after the recent run-up. It said that competitive intensity impacted AUM growth as well as margins. "However, FY24 reflected improvement in margins and AUM growth," it said. "We believe that the company has the potential to report a return on assets above 4%."
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Shares of the company fell as much as 3.5% to Rs 199.4 apiece, its lowest level since Aug. 8. It pared losses to trade 3.1% lower at Rs 200.38 apiece, as of 11:07 a.m. This compares to a flat NSE Nifty 50 Index.
The stock has risen 16.56% on a year-to-date basis and 29.68% in the last 12 months. Total traded volume so far in the day stood at 0.74 times its 30-day average. The relative strength index was at 45.21.
Out of 18 analysts tracking the company, 14 maintain a 'buy' rating, two recommend a 'hold,' and two suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 14.1%.
