Brokerages raise price targets on Manappuram Finance post Q3 nos

Brokerages raised price targets on Manappuram Finance after the gold loan-focused shadow-banker reported robust financial earnings for the three months ended December amid strong growth in gold loan asset under management (AUM).

Manappuram Finance on Tuesday reported a 63 per cent growth in consolidated net profit for December quarter, 2019, at Rs 397.84 crore against Rs 244.09 crore reported for the corresponding period of previous year.

Narnolia Financial Advisors turned bullish on Manappuram Finance post Q3 results. The brokerage believes robust AUM growth in last few quarters on the account of favourable gold prices drove growth for the company.

“Asset quality has been better. Operating expenses have been under control. Although there are some challenges in micro finance institution (MFI) segment on the asset quality front, however the management is focused enough to deal with them. Credit cost in the MFI segment is expected to remain high at 2 per cent in the near term. Despite these few challenges on the account of favourable gold prices and tonnage growth expectations, we increase our PAT estimates for FY21 by 8 per cent, increase price target to Rs 213 and change our rating to ‘buy’,” Narnolia Financial Advisors said in a report.

On a standalone basis, its net income stood at Rs 332.42 crore, up 57.7 per cent from the year-ago period, the Kerala-based company said in a statement.

Its total consolidated revenue from operations rose over 29 per cent to Rs 1,399.02 crore, taking its assets under management (AUM) to Rs 24,099.95 crore, up 35.52 per cent.

Gold loan AUM, its mainstay, increased 29.69 per cent to Rs 16,242.95 crore and the business added 3.25 lakh new customers and disbursed loans of Rs 40,304.26 crore in aggregate with live gold loan customers being at 26.4 lakh.

Nirmal Bang Securities said, “Manappuram reported a multi-quarter high growth in gold loan AUM. The growth was a function of increase in gold prices as well as tonnage growth. We have revised our NII estimates by 3.4%/4.5%/5.6%, PPOP estimates by 7.5%/7.8%/9.3% and PAT estimates by 2.2%/8.1%/9.5% for FY20/FY21/FY22, respectively.”

The brokerage retained a ‘buy’ rating on the stock with a revised price target of Rs 218 (Rs 207 earlier).

The scrip traded 0.24 per cent higher at Rs 189 around 11.05 am, while the benchmark BSE Sensex rose 290 points, or 0.71 per cent, at 41,257 at around the same time.


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