Manappuram Finance - Well-Entrenched Franchise, Attractive Valuations: ICICI Securities

ICICI Securities Report

Yield stabilisation in gold loans and turnaround in the micro finance business are noteworthy developments in Manappuram Finance Ltd.

Company has guided for 10-12% gold assets under management growth with 21-22% yields while its growth guidance for MFI segment is more than 30% for FY24. However, rising cost of funds in both the businesses and overall elevated competition in gold loans remain headwinds.

Strategically, Manappuram Finance is focussing on diversification (aiming to take gold loan mix down to 50%), digital transformation and employee investment.

Manappuram Finance currently trades at an attractive valuation of one time FY25E consolidated price/book. Maintain 'Buy'.

Key risks include:

1. yield reduction and continued slow growth in gold loan business, and

2. asset quality issues with growth in non-gold loan business.

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