MANAPPURAM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.8

Manappuram Finance offers attractive valuation and decent return metrics, but recent profit decline and asset quality concerns in its microfinance arm warrant caution. Suitable for value investors with a medium- to long-term horizon.

📊 Financial Overview

• Profitability: PAT declined to ₹376 Cr from ₹392 Cr QoQ; Qtr profit variation: -20.9%
• Margins: ROE at 16.0%, ROCE at 13.1% — decent but under pressure
• Debt Profile: Debt-to-equity ratio of 2.51 — high but typical for NBFCs
• EPS: ₹19.3 — supports a modest valuation base
• Dividend Yield: 1.29% — adds to total return potential

📈 Valuation Metrics

• P/E Ratio: 14.1 — significantly below industry average of 22.6
• P/B Ratio: ~1.85 — reasonable given book value ₹147
• PEG Ratio: 1.32 — suggests fair valuation relative to growth
• Intrinsic Value: Estimated around ₹285–₹295 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Leading NBFC in gold loans, with growing presence in microfinance and vehicle finance
• Moat: Strong rural presence and brand recognition in gold-backed lending
• Growth Drivers: Digital lending, cross-selling, and expansion of Asirvad Microfinance

📌 Entry Zone Recommendation

• Suggested Entry: ₹255–₹265 — near DMA200 and RSI oversold zone
• Technical Indicators: RSI at 34.4 (oversold), MACD negative — short-term weakness

📈 Long-Term Holding Guidance

• Attractive valuation and stable gold loan business support long-term holding
• Monitor asset quality and microfinance performance for sustained growth

✅ Positive

• Low P/E and reasonable P/B valuation
• Strong rural lending franchise
• Dividend yield of 1.29%
• FII and DII holdings increased

⚠️ Limitation

• High debt-to-equity ratio (2.51)
• Quarterly profit decline of 20.9%
• MACD and RSI indicate short-term bearish trend

📰 Company Negative News

• Q2 FY25 profit fell 62% YoY due to a sharp drop in microfinance revenue

  Onmanorama

• Concerns over asset quality and growth constraints in Asirvad Microfinance

  Business Today

  +1

🌟 Company Positive News

• Recommended as a buy during Muhurat trading for potential breakout from technical pattern

  The Times of India

🏭 Industry

• Industry P/E at 22.6 — Manappuram trades at a discount
• NBFC sector benefits from rural credit demand and gold loan stability

🧾 Conclusion

• Manappuram Finance is a value pick with stable core operations and attractive valuation
• Accumulate on dips with a medium- to long-term view; monitor microfinance risks

Sources: Times of India, Onmanorama, Business Today, CNBC TV18