Following the Reserve Bank of India’s (RBI) embargo on new business by Manappuram’s subsidiary, Asirvad Microfinance, multiple brokerages have revised their ratings and target prices for Manappuram Finance. The RBI’s restrictions, driven by concerns about pricing and other issues, have prompted analysts to adjust their outlook on the company. Here’s what the brokerages are saying:
| Brokerage | Rating | Target Price (Rs) | Key Points |
|---|---|---|---|
| Morgan Stanley | Equal-Weight | 170 | Downgraded due to RBI embargo on Asirvad Microfinance, which is expected to have a prolonged negative impact. |
| BofA | Buy | 220 | Maintains ‘Buy’ despite growth challenges, citing attractive valuation and strong gold financing business. |
| Jefferies | Hold | 167 | Downgraded to ‘Hold’ as regulatory restrictions impact earnings; potential downside from current price. |
Summary:
- Morgan Stanley has downgraded Manappuram Finance from ‘Overweight’ to ‘Equal-Weight,’ lowering the target price to Rs 170 from Rs 270. The downgrade reflects the significant negative impact the RBI’s embargo on Asirvad Microfinance is expected to have on Manappuram’s profits. The brokerage has cut its consolidated earnings forecasts for FY25 by 20% and for FY26-27 by 30%.
- BofA maintained its ‘Buy’ rating but reduced its target price from Rs 250 to Rs 220. The brokerage noted that the stock has de-rated by 25% over the past three months, which already reflects the company’s growth challenges and concerns about asset quality. BofA remains positive due to Manappuram’s strong gold financing business and believes the current valuation is undemanding.
- Jefferies downgraded its rating to ‘Hold’ from ‘Buy,’ with a revised target price of Rs 167. The downgrade comes as a result of the RBI’s restrictions on Asirvad Microfinance, which Jefferies expects will significantly impact the company’s earnings. However, the brokerage sees limited downside from current levels given the stock’s existing valuation.
With a current market price of Rs 177.33, these brokerages offer mixed views, with some downgrades due to regulatory challenges and others remaining optimistic about the company’s strong gold financing business and long-term potential.
Disclaimer: The information provided in this article reflects the views and target prices shared by various brokerage firms and is for informational purposes only. It should not be construed as investment advice or a recommendation to buy, sell, or hold any stock. Readers are advised to conduct their own research and seek independent financial advice before making any investment decisions. Neither the publication nor the author is responsible for any investment actions taken based on this information.
