Many NBFCs continue to reel from the collapse of IL&FS, even one year since the crisis. But one of the biggest gold loan providers, Manappuram Finance, has emerged much stronger. After the IL&FS default roiled the equity market, and especially NBFCs, Manappuram Finance had fallen from a high of Rs.126 in May 2018 to Rs.69 in October. But it has sharply recovered, gaining over 80% in 2019.
That is because despite the persisting liquidity squeeze, the NBFC has given little reason for investors to complain. In the first half of FY20, net interest income grew 23.7% YoY, AUM grew 31.9% and net profit zoomed 59.7%. Rise in the cost of borrowing, strong growth in the non-gold business segment, and an increase in gold prices have aided its performance. “The non-gold segment which is 33% of the consolidated AUM is clocking strong traction, which is expected to sustain,” states a JM Financial report. Besides, asset quality has remained stable with gross and net NPAs at 0.6% and 0.3% in September 2019 compared to 0.5% and 0.3% in March 2019.
Analysts at JM Financial expect the company to clock RoE and RoA of 20% and 5% by FY21 driven by “high margins, lower NPA / credit cost and higher scope for improvement in operational strength”. Hence, they had raised their target price from Rs.145 earlier to Rs.185.
1 June 2026
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Meanwhile, the management and employees are seizing the opportunity to book profit. While the stock hit an all-time high, executive director BN Raveendra Babu sold shares worth Rs.67.8 million on December 12. Amid this selling, the stock hit a new all-time high of Rs.177 on December 19. According to a BSE filing — this was his first disposal in the last three years — bringing his stake down to 0.17% from 0.21%. Overall, the top management and employees have sold shares worth Rs.207 million in 2019. Overall promoter holding stood at 35.12% for the quarter-ended September 2019.
Some foreign investors are also cashing in, having reduced their stake from 44.74% in June to 43.21% in September. While the biggest foreign investor in the stock — Apax-backed Quinag Acquisition — has maintained its holding at 9.4% over the past four quarters, Fidelity Investment has diluted its holding from 3.47% in June to 3.15% in September.
However, mutual funds had increased their holding from 3.24% to 3.88% in June to 4.63% in September. L&T MF has raised its stake steadily from 0.24% in March, 1.03% in June to 1.5% in the quarter gone by. Whereas, Kotak MF has increased its stake from 0.22% in March to 0.44% in September.
