scorecardresearchManappuram Finance: Brokerages stay bullish despite a 35% drop in its net

Manappuram Finance: Brokerages stay bullish despite a 35% drop in its net profit

Updated: 08 Aug 2022, 03:44 PM IST
TL;DR.

In the June quarter, Manappuram Finance reported mixed results. It reported a 32% year-on-year drop in net profit at 282.1 crore for the first quarter of the fiscal year, compared to 436.5 crore in the previous fiscal.

The NBFC’s consolidated assets under management (AUM) for Q1 stood at  <span class='webrupee'>₹</span>30,759.52 crore, registering an increase of 24.25% over the corresponding quarter of FY22 and up by 1.65% QoQ.

The NBFC’s consolidated assets under management (AUM) for Q1 stood at 30,759.52 crore, registering an increase of 24.25% over the corresponding quarter of FY22 and up by 1.65% QoQ.

Shares of Manappuram Finance, operating in the NBFC sector, have rallied 20.17% in the last one month, which is 7.05 per cent higher than the Bank Nifty, which returned 13.12 per cent in the same time. Following the release of its first-quarter results on August 5, the stock rose nearly 6.50%.

However, in the last six months, the stock lost about 31.35% of its value. Even at current levels, the stock is trading 51.96% below its 52-week high of 224, set on Nov 10, 2021. Further, over the last 3 years, the stock has been an underperformer, down 10.62% as compared to the Nifty Midcap 100, which gave a return of 92.91.

In the June quarter, Manappuram Finance reported mixed results. It reported a 35.32% year-on-year drop in net profit at 282.1 crore for the first quarter of the fiscal year, compared to 436.5 crore in the previous fiscal. Net profit, on the other hand, increased by 8.04 per cent quarter on quarter from 261.1 crore.

The operating profit margin fell to 895 bps year on year at 62.17 per cent due to a rise in expenses. The company's total expenditure during the June 2022 quarter jumped 32.27 per cent to 440 crore, compared with 329.2 crore in the corresponding period last year.

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Stock price chart of Manappuram Finance 

Total revenue during April-June 2022-23 fell to 1,502.7 crore from 1,573.7 crore in the same quarter of the previous fiscal year. Interest income drop to 1099 crore against 1233 crore.

The NBFC’s consolidated assets under management (AUM) for Q1 stood at 30,759.52 crore, registering an increase of 24.25% over the corresponding quarter of FY22 and up by 1.65% QoQ.

The gross non-performing assets ratio stood at 1.43% and net NPA was reported at 1.25%.

The company declared an interim dividend of Rs. 0.75 per equity share of the face value of Rs. 2. The record date for the dividend will be August 18, 2022. Trendlyne data showed that Manappuram Finance Ltd. has declared 51 dividends since Sept. 3, 2001.

In the past 12 months, the company has declared an equity dividend amounting to 3.00 per share. At the current share price of 108.85, this results in a dividend yield of 2.76%.

Axis Securities turned bullish on the stock post Q1 results and has recommended a buy rating on the stock with a target price of 165/share in its research report dated August 05, 2022. On the other hand, domestic brokerage firm Prabhudas Lilladher also gave a buy rating for the stock with a target price of 126 apiece.

"The management indicated maintaining yields at 21% for a gold loan, which should aid in improving the NII in the upcoming quarters." "Gold loan book growth guidance stands at 10% for FY23," said Axis Securities.

The management expects yields on gold loans to improve with demand from the bottom of the pyramid customers going up.

Following the new RBI guidelines for the removal of the spread cap, the NIMs on incremental MFI business are around 15%. Axis Securities said the large part of the stressed pool in the MFI is now provided for with a significant jump in the Stage-3 pool and a significant improvement in the credit cost on the MFI is expected from H2FY23 while achieving an MFI ROA of 1.5% for FY23.

An average of 14 analysts polled by MintGenie have a 'buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 08 Aug 2022, 03:44 PM IST