Bank of America (BofA) has maintained its ‘Buy’ rating on Manappuram Finance but has revised the target price down to Rs 220 from Rs 250. The revised target comes after the Reserve Bank of India (RBI) imposed restrictions on the company’s MFI subsidiary, Asirvad Microfinance, limiting loan sanctions and disbursals.
The brokerage has cut its consolidated earnings forecasts by 3-6% as it factors in a moderation in AUM growth for Asirvad. Over the last three months, Manappuram’s stock has de-rated by 25%, which BofA believes already reflects the company’s growth challenges and asset quality concerns.
Despite these hurdles, BofA retains its ‘Buy’ rating, citing the stock’s undemanding valuations and discount to historical levels. The strong outlook for the company’s gold financing business also supports the positive stance.
With a current market price of Rs 177.33, the revised target price indicates an upside potential for investors.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice. Please seek independent financial advice before making any investment decisions.
