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YES Securities
Manappuram Finance (Buy)
CMP: ₹127.2
Target: ₹165
On expected lines, Manappuram delivered strong results for Q4 FY20 with buoyancy in gold prices. AUM grew 5 per cent q-o-q/30 per cent y-o-y, while PPOP grew much faster at 11 per cent q-o-q/55 per cent y-o-y aided by operating leverage. Portfolio accretion in the mainstay Gold Loans (67 per cent of consolidated AUM) remained strong (grew 4.5 per cent q-o-q/31 per cent y-o-y), and was largely driven by higher gold prices (gold holdings declined 1.5 per cent q-o-q and grew by modest 7 per cent y-o-y).
Growth in customer base remains anemic. Weighted average LTV of GL portfolio stood at <60 per cent, based on past 30-day avg. price. Share of online portfolio increased to 48 per cent due to restricted movement/lockdown in March. It has further increased to 61 per cent currently. Very few GL customers opted for moratorium and uncollected interest levels remain largely unchanged (about 1.5 months) with collection through online channel.
Manappuram trades at around 1.3x/6x FY22 ABV/EPS. Retain BUY rating with a 12-month target price of ₹165. Robust profitability in GL business (RoA of 6.5 per cent+) to mitigate Covid impact on other loan segments. Overall RoA/RoE delivery to be resilient in FY21/22.
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