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IDBI Capital Report
Manappuram Finance Ltd.'s gold loan portfolio grew by 11.5% YoY (versus 8% YoY Q2 FY24) due to base effect. Overall assets under management growth remains strong at 27% YoY.
Management maintained the gold loan growth guidance; overall AUM growth guidance maintained above 20% YoY. We estimate 17% AUM compound annual growth rate (FY23-26) backed by non-gold portfolio. MFI reported strong profitability QoQ led by improvement in net interest margins.
MFI asset quality improved slightly with gross non-performing asset at 2.8% vs 3.0% QoQ. Consolidated net interest income grew by 7% QoQ led by improvement in net interest margins; pre-provision operating profit grew by 8% QoQ led by lower operating expenses (up 4% QoQ). Profit after tax grew marginally by 2% QoQ led by higher provisions (up 25% QoQ).
We have revised the estimates upwards for FY25E/FY26E (up 3%/5% adjusted book value respectively) and maintain ‘Buy' rating with a target price of Rs 225 (earlier Rs 205), valuing it at 1.2 times price/adjusted book value FY26E.
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