The stock price of Manappuram Finance Ltd (MFL) increased more than 50 per cent in the last eight trading sessions. From Rs 21.75 on June 18, the stock surged to Rs 33.15 on Wednesday, up 53 per cent.
According to company officials, the stock reacted favourably to developments including the recent rating action by Crisil and Brickwork.
The rating agencies have removed the company from their “rating watch with developing implications” and restored its credit rating to its previous levels. This has perked up investor sentiments, they said.
The rating reaffirmation takes cognisance of the measures taken by Manappuram Finance to address the observations made by the Reserve Bank, the officials said. According to an analyst, Baring India Private Equity had recently increased its stake in MFL to 5.94 per cent by purchasing a significant chunk of shares from the open market. This and various other developments have improved the stock’s outlook.
A committee appointed by RBI to look into the gold loan sector is expected to present its report by the end of July.
Growth outlook
Mr Prateesh Kasinadhan, Manager (Research) Acumen Capital Ltd, said the growth in gold loan business indicated Barring India’s confidence in MFL’s business. Besides, the recent statement by Manappuram that they are expecting a 20 per cent growth in business this year as well as the company’s entry into jewellery business had also reportedly encouraged Barring India to buy Manappuram shares, he said.
He pointed out that the recent RBI regulation is expected to eliminate small gold loan business companies, which will in turn benefit big NBFC’s such as Manappuram in the long run, he said.