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Geojit Financial
Manappuram Fin (Buy)
Target: ₹209
CMP: ₹164.8
Yield contraction offsets AUM growth Manappuram Finance (MGFL) is one of the leading gold loan NBFCs in India and is well diversified into other business segments like housing loan, vehicle loan and microfinance, with a branch network size of around 4,623 spread across the country.
Total AUM grew by 5.6 per cent y-o-y and 14.8 per cent Q-o-Q as Gold AUM grew 13.2 percent y-o-y while Non-Gold AUM grew 18.2 per cent y-o-y. The growth in AUM was by compromising yield as MFL focused on large ticket and longer tenure gold loan loans which has lower interest rates.
Net Interest Income grew by 1 per cent y-o-y while declined 4.1 per cent sequentially due to margin contraction.
Management expects 200 bps contraction in FY22 margin as the yield is expected to continue low in the coming quarters. During Q2FY22, GNPA/NNPA on standalone basis has improved to 1.6 per cent/1.3 per cent from Q1-FY22 level of 2.0 per cent/1.6 per cent.
With strong AUM outlook, safe LTV of 67 per cent and comfortable liquidity position, we remain positive on the stock.
We maintain our Buy rating on the stock with a target price of ₹209 based on 1.7x Adj BVPS of FY23.
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