Manappuram Finance Diversifies Loan Portfolio Beyond Gold Sector
During an investor and analyst gathering, Manappuram Finance articulated an upbeat future for its non-gold loan ventures, outlining strategic plans for microfinance, vehicle finance, home finance, MSME and allied loan products.
Highlighting ambitions for a robust 20 per cent Compound Annual Growth Rate (CAGR) in Assets Under Management (AUMs) and targeting a Return on Equity (RoE) of approximately 20 per cent, Manappuram showcased its strategic vision.
While anticipating an 8-10 per cent yearly growth in gold loans, the company emphasised the significance of maintaining a yield within the 21-22 per cent range. This nuanced approach, prioritising profitability over lower-yielding gold loans, positions Manappuram Finance to achieve a consolidated AUM CAGR of about 20 per cent and an RoE of roughly 20 per cent.
Key takeaways from Manappuram Finance's presentation included the success of its Joint Liability Group (JLG) model in microfinance, boasting a collection-to-billing rate of around 100 per cent.
The company displayed resilience in vehicle finance, overcoming disruptions due to the pandemic, emphasizing aggressive tie-ups with Original Equipment Manufacturers (OEMs) and streamlined processes, achieving an impressive Turnaround Time (TAT) of 12-15 minutes in two-wheeler loans.
In home finance, Manappuram is strategically targeting Tier 3/4 locations, focusing on self-employed non-professionals. Their risk management approach includes decentralised underwriting and centralized credit monitoring.
The company showcased scalable MSME products with an Average Ticket Size (ATS) ranging from Rs 400,000-600,000, highlighting cross-selling to existing gold loan customers as a vital strategy.
Diversification into non-gold segments, constituting 47 per cent of its AUM mix, strategically positions the company to mitigate cyclicality in the gold loan segment.
Prioritizing profitability over aggressive loan growth, Manappuram highlighted its commitment to a favorable risk-reward scenario.
Currently trading at one time September 2025 estimate price-to-book value (P/BV), Manappuram is seen as having potential for a re-rating in valuation multiples.
Maintaining a 'Buy' rating, Motilal Oswal revised the target price to Rs 205 based on 1.2 times September 2025 estimate consolidated Book Value Per Share (BVPS).
Financial Performance
Manappuram Finance's non-banking finance company (NBFC) witnessed a 37 per cent annual surge in profit to Rs 560.7 crore from Rs 409 crore in the year-ago quarter, marking a 12.5 per cent sequential increase.
The company declared an interim dividend of Rs 0.85 per equity share of face value Rs 2.
Net Interest Income (NII) stood at Rs 1,468 crore, compared to Rs 1,168 crore in the corresponding quarter of the previous fiscal.
