MOSL: MANAPPURAM FINANCE (Buy)-Gold AUM and holdings moderate further; auctions remain elevated
MANAPPURAM FINANCE: Gold AUM and holdings moderate further; auctions remain elevated
(MGFL IN, Mkt Cap USD2.2b, CMP INR191, TP INR220, 15% Upside, Buy)
- Manappuram Finance (MGFL) reported consolidated PAT at INR4.4b (up ~19% YoY / down 7% QoQ; 8% miss) in 1QFY22. The company missed our expectations due to a 5% miss on NII (down 2% QoQ) at INR10.3b and elevated provisions at INR1.2b (11% above estimate). PPoP at INR7.1b (5% miss) was down 3% QoQ and up 11% YoY.
- The gold loan book declined 13% QoQ to INR165b and gold holdings 11% QoQ to 58.1t. Over the last two quarters, gold holdings have cumulatively declined 15% and gold AUM 18% over this period. In all non-gold segments, the respective loan books were flat sequentially.
- MGFL has taken a cautious view on gold prices – to guard itself against decline in prices, the company has deemed it more prudent to auction gold to de-risk itself. In the process, it has had to trade off growth for protection on asset quality.
- The management shared that it has introduced attractive products/schemes for higher ticket size customers to protect its turf from pricing competition. It guided that this could lead to yield compression but sustain growth.
Manappuram Finance Ltd is an India-based non-banking financial company. The Company provides a range of retail credit products and financial services. It operates through two segments: Gold loan & others and Microfinance. Its product offerings include gold loans, microfinance, housing finance business, vehicle and equipment finance business and others. It offers three types of loan under microfinance, such as Income generating program (IGP) loan, product loan and small and medium-sized enterprises small and medium enterprises (SME) loan. It offers commercial vehicle loans and equipment finance. Its other products and services include forex and money transfer and insurance broking. The Company's subsidiaries include Asirvad Microfinance Limited (AML), Manappuram Home Finance Limited (MHF) and Manappuram Insurance Brokers Limited (MAIBRO).
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