Buy Manappuram Finance, target price Rs 122: Axis Securities

Axis Securities has buy call on Manappuram Finance Ltd. with a target price of Rs 122. The current market price of Manappuram Finance Ltd. is Rs 105.9. Time period given by analyst is one year when Manappuram Finance Ltd. price can reach defined target.

Manappuram Finance Ltd., incorporated in the year 1992, is a Mid Cap company (having a market cap of Rs 8946.39 Crore) operating in NBFC sector.

Manappuram Finance Ltd. key Products/Revenue Segments include Interest, Other Operating Revenue, Fees & Commission Income for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1502.73 Crore, up .77 % from last quarter Total Income of Rs 1491.31 Crore and down -4.51 % from last year same quarter Total Income of Rs 1573.74 Crore. Company reported net profit after tax of Rs 281.92 Crore in latest quarter.

Investment Rationale
The management expects to maintain yields at ~21% in the near future. It also expects yields on Gold loans to improve further with demand for the small ticket size loan from the bottom of the pyramid customers going up. Its balance sheet liquidity remains comfortable with no funding challenges and only 2.7 times leverage. The NIMs on incremental MFI business has gone up to 15% post the new RBI guideline on removal on the cap on spreads which should augur well for overall better-blended yield realization. With MGFL trading below its 5-Yr average of ~1.1x P/BV, the brokerage believes the underperformance in the past few quarters is priced-in. Against this backdrop, it should see an upside from here on with the company’s overall performance improving in the coming quarters.