9 MANAPPURAM share price target reports by brokerages below. See what is analyst's view on MANAPPURAM share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Access to funds has been uninterrupted, including CP rollovers and funds from banks and AMC partners. The company does not expect any funding challenges either in the standalone entity or in Asirvad. Excess cash and undrawn bank lines as of Mar’20 stood at Rs23bn (on standalone basis). While we do no fret too much over asset quality in the gold loan business, we do believe that the current economic situation would lead to high stress formation in the non-gold loan portfolios, especially used-CVs and MFI. We estimate consolidated loan book growth of 6.5% in FY21 followed by growth recovery in FY22. In the near term, we expect the AUM to decline on account of redemptions and pull-back on non-gold disbursements. We build in higher provisioning to reflect increased asset quality challenges in the non-gold portfolio. As part of our thesis, we have been citing MGFL’s non-gold portfolio asset quality as a key investment risk since the book is unseasoned. Per se, on the key P&L items, MGFL posted NII growth of 26% YoY at Rs8,911mn, PPOP growth of 55% YoY at Rs6,567mn and PAT growth of 44% YoY at Rs3,982mn. NII was 2 % below estimate; PPOP/PAT were 15%1% above estimates. We have cut our estimates for FY21/FY22 and retained Buy rating on MGFL, revising our target price to Rs142 (from Rs149 earlier), valuing the stock at 1.4x FY22E P/BV.
Q4FY20 reported sequential earnings dip (Rs3.9bn down 1% QoQ although in-line at Rs4.0bn) led by COVID related Rs 150mn standalone and Rs550mn microfinance provisioning. Buoyed by digital gold (48% of gold AUM as at Q4FY20, 50%+ Apr’20) and 27% YoY non-gold AUM growth, overall AUMs at Rs252bn (in-line) grew healthy 29.8%YoY/4.7%QoQ. Liquidity sufficiency (Standalone cash/undrawn bank lines of Rs23bn, Rs30bn Asirvad) and cost rationalization (opex growth mere 2% QoQ, C/I down to 36% from 48% a year ago & 39% quarter ago) aided robust operating profit at Rs6.6bn (PLe: Rs5.7bn) growing 10.7% QOQ/55% YoY. GNPA deteriorates 40bps QoQ to 0.8%. However, pandemic situation puts non-gold business to litmus test as 100% MFI book, ~50% of Vehicle finance (VF) and 40% of housing finance (HF) fall under moratorium. With COVID uncertainty looming large & Mngt citing caution, non-gold segments are expected to witness stress on growth & asset quality. Against this backdrop, we prune down EPS estimates by 13-14% over FY21-22E. While non-gold mix face challenging business cycles, gold business traction stands supported by gold price uptick. We, therefore, reiterate Accumulate rating, but tweak our PBV multiple to 1.7x (earlier 1.5x) arriving at price target of Rs 142 (earlier Rs 130) FY22E.
Manappuram Finance (MGFL) is one of the leading gold loan NBFCs in India and is well diversified into other business segments like housing loan, vehicle loan and microfinance, with a branch network size of around 4,623 spread across the country. Owing to Covid-19 pandemic, we expect MGFL’s interest income to only fall by 0.6% in FY22E compared to our previous estimate. Going forward, we expect NIM to remain stable at 15.9% in FY22E as we expect fast recovery in business growth. Considering the current slowdown, we have also revised our estimate for PAT to Rs 1,946cr in FY22E which is largely in line with our previous estimate of Rs 1958cr. We value the stock at 1.3x FY22E Adj. BVPS of Rs 102.4 and recommend BUY rating with a target price of Rs 133.
The company is exploring the online payment solution in case a customer wants to exercise the option of paying. We think the asset quality in the MFI portfolio could deteriorate materially in the near-tomedium term. In 4QFY17 (post demonetization), MFI NPA had jumped to 4.66%. In the other segments – housing, CV finance (86-87% used CV) – repayments and collections have stopped since the last 10 days. The management has reiterated that it wants to bring down the share of gold AUM to 50%. From a liquidity standpoint, the balance sheet position is comfortable as of now. Quantum of undrawn bank lines stands at nearly Rs10bn. Besides this, the company has raised resources from various avenues, including offshore markets, NCDs, banks and financial institutions. Share of CPs stands at 15% with no maturities due in Apr-20. The stock has corrected 52% from its 52-week high and currently trades at 0.9x FY22E ABV. We think the valuation is attractive for potential ROE of nearly 25% over FY21-22E. We retain BUY with a target price of Rs149, based on 1.4x FY22E ABV. One of the key risks to our profit and BV estimates would be higher credit costs/write-offs.
We incorporate modest increase in NPAs AT 0.75%+ over FY22-22E in anticipation of credit quality vulnerability on micro finance portfolio and macro headwinds. While MGFL stands poised to deliver robust business and asset profile catching up on valuations to its closet peer, we tweak target multiple to 2.3x PBV Sep’21E with a revised target price of Rs202. Any further re-rating should be determined by ramping up of non-gold mix against new business cycles. Hence, reiterate ACCUMULATE.
We are initiating coverage on Manappuram Finance (MGFL) with an Accumulate rating given strong moat in gold loan business (11%CAGR over FY20-22, secured lending, brisk asset liquidation) and rising scalability of non-gold business. MGFL stands in a sweet spot underpinned by low leverage (<5x) and effective asset liability management (ALM). We estimate 20% AUM CAGR, operating leverage (~145bps cost-income decline) and prudent asset quality (~0.8% GNPA/credit costs) over FY20-22E. The recent valuation uptick has been factoring in the higher yielding business (87% of total) expansion that is expected to fetch higher returns (5.1%RoA/18.9%RoE: FY22E). However, any further re-rating is function of non-gold business scalability and delinquency control across new business cycles. Hence, we recommend Accumulate rating valuing consolidated business at 1.9x PABVSep’21E arriving at price target of Rs 195.
Pick-up in AUMs, increase in non gold pie, stable asset quality, and favorable regulatory environment will be positive for the company. Focus on shorter tenor of product has helped MGFL in containing asset quality pressures. With the management targeting a diversified portfolio mix of 50/50 Gold/Non-Gold portfolio, we expect stability in AUM to improve further. We maintain a buy with a target price of Rs 156 (2x FY21E BVPS).
Per se, on the key P&L items, MGFL posted NII growth of 23% YoY at Rs7,640mn, PPOP growth of 39% YoY at Rs4,510mn and PAT growth of 36% YoY at Rs2,722mn. We have revised our estimates for FY20/FY21 and retained Buy rating on MGFL, revising our target price to Rs153 (from Rs170 earlier), valuing the stock at 2.0x FY21E P/BV.
Valuations: At CMP, the stock is trading at P/BV of 2.0x and 1.7x respectively for FY20E BVPS of Rs64.9 and FY21E BVPS of Rs78. With demonetisation impact left behind, the company is targeting healthy growth in gold loan business going forward, supported by rising gold prices and decreasing interest rates. The new business segments are also expected to do well in the coming years. Also, the company is having healthy CAR, one of the lowest NPAs among NBFC space, and positive asset-liability mismatches. Hence, we value MGFL at 2.0x on FY21E Adj. BV/Share and arrive at a target price of Rs154 and recommend ‘Buy’ rating.
The non-gold business constitutes ~33% of the total consolidated AUM. During the quarter, Asirvad MFI posted a 58% YoY growth in its AUM to ~Rs3840cr, CV division increased its AUM by 78% to Rs1100cr and Home-finance subsidiary reported AUM growth of 38% to Rs520cr. MGFL management intends to divide the book equally between Gold and Non-Gold AUM.Asset quality stable: Overall GNPA has eased to 0.5%. GNPA in gold/ MFI/ housing/CV has eased by 10bps/30bps/100bps/50bps sequentially to 0.5%/0.5%/3.9%/1.9% respectively. Pick-up in AUMs, stable asset quality, and favorable regulatory environment will be positive for the company. Focus on shorter tenor of product has helped MGFL in containing asset quality pressures. We maintain a BUY with a target of Rs. 160
Pick-up in AUMs, stable asset quality, benign gold price and favorable regulatory environment will be positive for the company. Focus on shorter tenor of product has helped MGFL in containing asset quality pressures. With the management targeting a diversified portfolio mix of 50/50 Gold/NonGold portfolio, we expect stablility in AUM to improve. We maintain a buy with a target price of Rs 156 (2x FY21E BVPS).
Innovation Continues In The Background We recently met a comprehensive top management line-up from Manappuram Finance (MFL) that included (1) V.P. Nandkumar, MD & CEO (2) Bindu A.L., CFO (3) Jeevandas Narayan, MD, Home Finance (4) K Senthil Kumar, CEO, Vehicle Finance (5) Mayank Thatte, CFO, Asirvad MFI and (6) Sushil Kumar Mishra, DGM, Treasury and gleaned incremental insight into the strategy of the company. We share our detailed takeaways below. We marginally revise our estimates upward for FY20/FY21 and retain Buy rating, revising upward our target price to Rs154 (from Rs141 earlier), valuing the stock at 2.0x FY21E (2.4x FY20E) P/BV. We prefer MFL over Muthoot Finance and, currently, have an Accumulate Rating on the latter
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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