
Morgan Stanley has downgraded Manappuram Finance Limited (MGFL) from “Overweight” to “Equal-Weight,” reducing the target price from Rs 270 to Rs 170. This downgrade follows the Reserve Bank of India’s (RBI) embargo on new business by Manappuram’s subsidiary, Asirvad Microfinance.
The RBI’s restrictions, due to concerns about pricing and other issues, are expected to have a prolonged and significant negative impact on Manappuram’s profits. Morgan Stanley has cut its consolidated earnings forecasts for Manappuram by 20% for fiscal year 2025 and by 30% for fiscal years 2026 and 2027.
Despite the substantial earnings reductions, Morgan Stanley notes that the standalone valuation of Manappuram remains attractive. However, the firm cautions that investor interest in the stock could take a long time to recover due to the regulatory challenges and earnings outlook.