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Shares of <a target="_blank" href="https://mintgenie.livemint.com/stocks/manappuram-finance-S0003183">Manappuram Finance </a>plunged 12 percent to hit its 52-week low of ₹91.95 on the BSE in Thursday’s intra-day trade afetr the firm reported weak numbers for the March quarter (Q4FY22).

The NBFC's net profit declined 44 percent year on year (YoY) to ₹261 crore in the Q4FY22 on account of subdued growth in gold loan AUM and lower NII. It had posted a profit of ₹468 crore in the year-ago period.

Its net interest income (NII) also fell 10.2 percent YoY to ₹986 crore from ₹1,098 crore. Its total income also fell 10 percent to ₹9,965 crore from ₹11,063 crore in the year-ago period.

The company’s assets quality also worsened during the quarter as gross non-performing asset (NPA) and net NPA ratio increased by 160 basis points (bps) and 170 bps quarter on quarter (QoQ) to 3 percent and 2.7 percent, respectively.Post the earnings, the company said that the net profit was affected temporarily due to shift from high yield to lower yield gold loans. "We would prioritize profitability over the relentless pursuit of loan growth in FY23. The demand environment in gold loans is not very buoyant. Howeever, we do not wish to pursue growth at the cost of a further compression in spreads," the management noted.Let's take a look at what the brokerages have to say about the stock post its earnings:Motilal OswalBrokerage house Motilal Oswal Financial Services believes that muted gold loan growth and potential margin compression are already priced in the current valuation of the stock."The company's gold loan demand remains muted, particularly in the low-ticket size segments, leaving little alternative for gold loan NBFCs but to compete in the higher-ticket size segments. In the current demand environment, loan growth will be a casualty, if priority shifts to spreads and margins," it added. It maintained a 'buy' call on the stock with a target price of ₹130 per share.Nirmal BangThe brokerage noted in QFY224, that the overall growth trend in the gold loan business remained weak, as expected. The management cited continued highcompetition and low demand as key reasons for this weak growth. However, with demand starting to pick up in Q1FY23, along with a gradual reduction in systemic liquidity, the management holds a positive outlook on gold loan growth as well as yields, it added."The company is targeting 5 percent return on asset the gold loan business, lower than that of the larger competitor Muthoot Finance. A weakening position in its core gold loan business could be a risk to multiple expansion despite cheap valuation," the brokerage noted. It maintained a 'buy' call on the stock with a reduced target price of ₹166. It continues to prefer Muthoot Finance over Manappuram due to the former’s stronger business model.Yes SecuritiesThe brokerage cut earnings estimates significantly for FY23/24 by assuming much lower growth in Gold AUM, slower growth in Microfinance portfolio, gradual recovery in gold portfolio yield and likely continuance of elevated credit cost in microfinance.However, it retained an 'add' rating on the stock in the light of estimated an 16 percent return on equity delivery in FY23-24 and that stock/valuation seems to be largely discounting headwinds in gold and MFI businesses. Manappuram’s dilemma of choosing between growth and profitability is structural, given its weak customer acquisition engine and borrower stickiness, added Yes Securities. It also reduced the stock's target price to ₹135 from ₹185 earlier.

Manappuram Finance tanks 12% post results; here's what 3 brokerages have to say

The NBFC's net profit declined 44 percent year on year (YoY) to ₹261 crore in the Q4FY22 on account of subdued growth in gold loan AUM and lower NII. It had posted a profit of ₹468 crore in the year-ago period.

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