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In the last three trading sessions, gold loan company Manappuram Finance has hit the upper circuit once and scaled three 52-week highs, buoyed by an overall improvement in business scenario and a rule relaxation by the Reserve Bank of India that company officials say has begun to have an effect on lending potential. In the past one week, its value has increased 25 per cent against the growth of the benchmark Sensex at 1 per cent. Muthoot Finance, its peer, has also shown a five per cent increase over the last week.
On the BSE, Manappuram increased 19 per cent on Tuesday, hitting the upper circuit of ₹26.4 and was accompanied by large volumes. On Thursday, it increased another 3 per cent to settle at ₹27.20.
I Unnikrishnan, Deputy Chief Executive Officer, Manappuram Finance, said the stock movement is on account of value buying. “The book value of the stock is around ₹30, and the traded value has been around ₹20. So, this is just value buying,” he told BusinessLine .
It recently raised capital of ₹200 crore through non-convertible debentures, which were oversubscribed. The proceeds will be used for lending, he said. The non-banking financing company has begun a housing loan venture which will take off in two months.
With ₹2,500 crore of equity share capital, the company is awaiting guidelines from the RBI on banking licences. “We have adequate capital to get into banking,” he said.
Rajesh Kumar K, Company Secretary, Manappuram Finance, said a move by the RBI to raise the loan-to-value ratio to 75 per cent from 60 per cent has bolstered disbursement capacity. Its AUM as of June was at ₹8,200 crore, which has consistently declined since the fourth quarter of fiscal year 2012-13. “Though assets have been declining, the RBI move to raise the LTV level will have a positive effect this fiscal,” he said. A research report by Antique Stock Broking says loan demand is expected to recover in consonance with the economy. The regulatory environment has also stabilised, creating a good environment for gold NBFCs.
The company’s profits during the June quarter were up 36 per cent on a quarter-on-quarter basis at ₹44 crore.
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