Shares of Manappuram Finance slipped over 1% in Friday’s trade, edging down to ₹271.40 after global brokerage CLSA downgraded the stock to “hold” from “outperform” following the company’s September-quarter earnings. The stock opened lower and remained under pressure as analysts cited margin moderation and credit-cost concerns.
Brokerage sentiment turns cautious
The downgrade by CLSA is accompanied by a cut in price target to ₹290 from ₹310, implying limited upside ahead. CLSA noted that Manappuram’s standalone Q2 profit after tax missed estimates by around 12%, led primarily by higher credit costs. Its subsidiary, Asirvad Microfinance, also posted another quarterly loss due to shrinking operating profit and elevated credit costs.
The gold loan business continued with its yield-cut strategy to drive growth, resulting in 9% sequential growth in the gold loan book to ₹31,500 crore, but reported yields moderated by 80 basis points to 19.7%. CLSA highlighted that growth came largely from higher gold prices, while tonnage and loan-to-value remained stable.
Jefferies maintains ‘hold’ stance
Jefferies also retained a “hold” rating with a price target of ₹285. The firm observed that Manappuram’s AUM growth was in line with expectations but net interest margins declined sequentially, with further reductions in gold loan yields. While asset quality trends in the microfinance segment are stabilising, auto loan gross NPAs rose sharply year-on-year.
Jefferies added that lower margins and unwinding of non-gold loans could weigh on earnings despite fair valuations. Management transition remains a key monitorable, with newly appointed CEO Deepak Reddy expected to outline a detailed strategy by Q4.
Overall, analyst views remain mixed—of 17 covering analysts, nine rate the stock a “hold”, five recommend “buy”, and three suggest “sell”. Consensus price targets currently imply a mild downside of around 1.3% from current levels.
Stock performance
Shares of Manappuram Finance were trading at ₹271.40, down 1.27% as of 9:27 AM on Friday, compared to the previous close of ₹274.90. The stock has a market capitalisation of ₹232.61 billion and has traded in a range of ₹262.90 to ₹272.35 during the session. Over the past six months, the stock has gained nearly 20%, and it is up over 43% so far this year.
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