Despite posting a surprise consolidated net loss of ₹203.2 crore in the March quarter, Manappuram Finance has received a vote of confidence from brokerage CLSA, which has maintained its ‘Outperform’ rating on the stock and assigned a target price of ₹260 per share. The brokerage said it remains constructive on the company’s long-term shift toward a more secure lending portfolio.
The net loss in Q4FY25 compares sharply with a profit of ₹563.5 crore in Q4FY24, driven primarily by a sharp spike in provisions. Impairment on financial instruments rose to ₹919.2 crore, more than four times higher than the ₹187.8 crore provision a year ago, and up sharply from ₹554.6 crore in Q3FY25. Meanwhile, net interest income (NII) declined 6.7% YoY to ₹1,464.3 crore.
CLSA noted that the company’s pre-provision operating profit (PPOP) missed estimates by 10%, citing lower margins and higher operating expenses as the key drags. The brokerage explained that Manappuram has recently shifted its product mix to target higher-ticket, more secure customers, which has temporarily pressured yields but is expected to stabilise in the coming quarters.
Amid the challenging quarter, gold loan AUM showed signs of recovery, and housing AUM remained strong, according to CLSA. The company has also announced plans to strategically reduce its microfinance (MFI) book to just 10% of overall AUM, aiming to build a 90% secured lending portfolio, in line with its risk-mitigation efforts.
CLSA is projecting a 20% growth in the gold loan segment in FY26, supported by a focused customer strategy, stable asset prices, and expansion into higher-ticket segments. The brokerage believes that Manappuram’s pivot toward secured products, including housing and gold loans, will improve asset quality and return ratios over the medium term, even if the near-term volatility persists.
Disclaimer: The views expressed are those of the brokerage and not the publication. Investors are advised to consult a certified financial advisor before making investment decisions.
