MANAPPURAM - Investment Analysis: Buy Signal or Bull Trap?

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

Investment Rating: 3.6

📉 Manappuram Finance shows decent fundamentals but faces margin pressure and asset quality concerns. Ideal entry zone: ₹250–₹260. If already held, consider a 2–3 year horizon with exit near ₹290–₹300 or if profitability metrics weaken further.

🔷 Positive

• 📊 ROE of 16.0% and ROCE of 13.1%: Indicates moderate capital efficiency.
• 📉 Low P/E (13.8) vs Industry PE (22.3): Suggests undervaluation.
• 💰 Dividend yield of 1.30%: Adds to total return potential.
• 📈 EPS of ₹19.3: Reflects solid earnings base.
• 📈 FII and DII holdings increased: Indicates improving institutional sentiment.

⚠️ Limitation

• 📉 PEG ratio of 1.30: Indicates fair valuation, not deeply undervalued.
• 📉 High debt-to-equity (2.51): Typical of NBFCs but adds financial risk.
• 📉 MACD negative (−2.74) and RSI (34.4): Suggests bearish technical momentum.
• 📉 Quarterly profit decline (−20.9%): Indicates earnings pressure.

🚫 Company Negative News

• 📉 Q2 FY26 net profit slumped 62% YoY to ₹217.3 Cr. due to falling net interest income

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• 📉 Asirvad Microfinance subsidiary posted another loss, driven by elevated credit costs

  CNBCTV18

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• 📉 CLSA downgraded the stock to “Hold” and cut its target price to ₹290

  CNBCTV18

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✅ Company Positive News

• 📈 Despite weak Q2 results, shares edged higher, showing resilient investor sentiment

  Zee Business

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• 💰 Interim dividend declared with record date set for November 7, 2025

  The Economic Times

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• 📈 Revenue from gold loans rose YoY, showing core business strength

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🏭 Industry

• 🏦 Operates in NBFC and gold loan segment, benefiting from safe-haven demand amid global uncertainty.
• 📉 Industry PE of 22.3 suggests Manappuram trades at a discount.

🧾 Conclusion

• 📌 Ideal entry zone: ₹250–₹260 based on technical support and valuation.
• ⏳ Holding period: 2–3 years to benefit from gold loan growth and margin recovery.
• 🚪 Exit strategy: Consider exit near ₹290–₹300 or if asset quality and profitability continue to deteriorate.

Sources

CNBCTV18

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