MANAPPURAM - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.5
| Stock Code | MANAPPURAM | Market Cap | 24,592 Cr. | Current Price | 291 ₹ | High / Low | 322 ₹ |
| Stock P/E | 15.7 | Book Value | 147 ₹ | Dividend Yield | 1.20 % | ROCE | 13.1 % |
| ROE | 16.0 % | Face Value | 2.00 ₹ | DMA 50 | 293 ₹ | DMA 200 | 270 ₹ |
| Chg in FII Hold | -1.38 % | Chg in DII Hold | 1.98 % | PAT Qtr | 381 Cr. | PAT Prev Qtr | 376 Cr. |
| RSI | 48.0 | MACD | -3.81 | Volume | 59,51,432 | Avg Vol 1Wk | 79,99,207 |
| Low price | 169 ₹ | High price | 322 ₹ | PEG Ratio | 1.47 | Debt to equity | 2.51 |
| 52w Index | 80.0 % | Qtr Profit Var | -15.9 % | EPS | 18.5 ₹ | Industry PE | 19.4 |
📊 Analysis: Manappuram Finance trades at ₹291 with a P/E of 15.7, slightly below the industry average of 19.4, suggesting fair valuation. ROE (16.0%) and ROCE (13.1%) are moderate, reflecting average efficiency in generating returns. Dividend yield at 1.20% provides some income support. The PEG ratio (1.47) indicates valuation is somewhat expensive relative to growth. Technical indicators (RSI 48.0, MACD -3.81) show neutral-to-bearish momentum. PAT has remained stable (376 Cr. → 381 Cr.), but quarterly profit variation (-15.9%) highlights earnings volatility. Debt-to-equity at 2.51 indicates high leverage, which increases financial risk.
💡 Entry Price Zone: Ideal entry would be between ₹270–₹285, closer to the DMA 200 (₹270), offering better valuation comfort and risk-reward balance.
📈 Exit / Holding Strategy: If already holding, consider a medium-term horizon (2–3 years) while monitoring debt levels and profitability. Exit strategy should be triggered if price sustains below ₹260 or if ROE/ROCE fail to improve. Long-term holding is only advisable if leverage reduces and earnings stabilize.
✅ Positive
- P/E (15.7) below industry average, fair valuation.
- Dividend yield at 1.20%, attractive for income investors.
- Stable PAT performance (376 Cr. → 381 Cr.).
- DII holdings increased (+1.98%), showing strong domestic institutional support.
⚠️ Limitation
- High debt-to-equity ratio (2.51), raising financial risk.
- Moderate ROE (16.0%) and ROCE (13.1%).
- Quarterly profit variation (-15.9%) shows earnings volatility.
📉 Company Negative News
- FII holdings reduced (-1.38%), showing declining foreign investor interest.
- Weak short-term technical momentum (MACD -3.81).
📈 Company Positive News
- DII holdings increased significantly (+1.98%), reflecting confidence from domestic institutions.
- EPS at ₹18.5, showing steady earnings power.
🏭 Industry
- NBFC sector has cyclical growth tied to credit demand and economic cycles.
- Industry P/E at 19.4 highlights Manappuram is trading at a discount compared to peers.
🔎 Conclusion
Manappuram Finance shows fair valuation with moderate returns and attractive dividend yield, but high leverage poses risks. It is a moderate candidate for long-term investment only if debt levels reduce. Best strategy: accumulate between ₹270–₹285 and hold for 2–3 years. Existing holders should monitor debt and profitability, exiting if price drops below ₹260 or fundamentals weaken.