Jefferies has maintained a ‘Hold’ rating on Manappuram Finance while raising the target price to ₹235 per share. The revision follows the announcement of a ₹43.85 billion equity infusion from Bain Capital, which will give the global private equity giant an initial 18% stake in the company at ₹236 per share. This transaction has triggered a mandatory open offer for an additional 26% stake at the same price. Post-deal, Bain Capital could hold up to 41.7%, establishing joint control with existing promoters, who will retain a 28.9% stake.
While Jefferies acknowledged the positive strategic shift in bringing Bain Capital on board and the likely induction of a new management team, it believes that the recent share price movement already reflects much of this optimism. The brokerage remains cautious, citing potential execution challenges in ramping up the gold loan business and strengthening non-gold segments like microfinance, housing, and vehicle finance.
Jefferies emphasized that for further rerating to occur, clarity around the incoming management’s growth strategy and execution capabilities will be crucial. While the Bain Capital partnership brings fresh capital and governance confidence, the real test lies in translating strategy into results.
Manappuram Finance, a key NBFC player in India, has traditionally focused on gold loans but is now eyeing scale-up in other segments. The Bain deal, which was struck at a ~10% premium to the stock’s closing price on the day before the announcement, marks a pivotal step in its evolution into a diversified retail lender.
