Shares of Manappuram Finance, an NBFC firm, rallied sharply in Wednesday’s trading session as investors reacted positively to the company’s Q2FY24 performance. The company on Monday reported a 37% YoY jump in its consolidated net profit at ₹560.65 crore. In the corresponding quarter of last year, the company recorded a net profit of ₹409.5 crore.
Sequentially, the net profit increased by 12.6%, as compared to ₹498.02 crore reported in the quarter ending June 2023. It reported a 25% improvement in net interest income at ₹1,468 crore as against ₹1,168 crore reported in Q2 FY23.
The total revenue during the quarter came in at ₹2,174 crore, a 27% increase compared to ₹1,714 crore in the same period last year. Segment-wise, the ‘gold, loan, and other’ category of business contributed ₹1,537.22 crore in Q2 FY24 of the total revenue, and ‘microfinance’ added ₹636.80 crore.
In terms of asset quality, the GNPA improved to 1.6% from 2% in Q2FY23, while the net NPA dropped to 1.4% in Q2FY24 from 1.8% in the year-ago period.
The Assets Under Management (AUM) in gold witnessed a QoQ increase of approximately 1% and a YoY increase of 8%, reaching around ₹20,800 crore. The quantity of gold measured in tonnage remained relatively stable at 59.4 tonnes compared to the previous quarter.
Following the company’s Q2FY24 numbers, the shares opened strongly in today’s trading session at ₹153.50 apiece compared to the previous closing price of ₹140.35 apiece and strengthened further to ₹154.35 apiece, marking an impressive gain of 10%.
Domestic brokerage firm Motilal Oswal has revised its FY24E/FY25E EPS upward by 5%/6%. This adjustment accounts for robust growth expectations in non-gold segments and an increase in other income. The brokerage projects a 10%/20% CAGR in AUM for gold/consolidated book over FY23 and FY26.
Additionally, it models a consolidated profit after tax (PAT) CAGR of approximately 27% over the same period. These adjustments led to the estimation of a consolidated RoA and RoE of around 5.0% and 20% in FY26.
“The management has demonstrated that it will not pursue loan growth at the cost of compression in spreads, which we believe will continue to be a driver for higher profitability. MGFL trades at 0.8x Sep’25E P/BV, and we anticipate that there is scope for a re-rating in valuation multiples for a franchise that can deliver a sustainable RoE of 20%,” said the brokerage.
The brokerage pointed out that the risk-reward for Manappuram Finance is favourable, and therefore it continued with its ‘buy’ rating with a target price of ₹180 apiece.
On the other hand, Dolat Capital maintained its ‘Reduce’ call on the stock with a target price of ₹155 apiece, valuing the standalone entity at 1x Sep-25E ABV and the MFI book at 1.4x PBV.
“Weakness in the core business of gold and average non-gold franchises remain a concern for us,” said the brokerage.
At 10:15 AM, the stock was trading with a gain of 8.87% at ₹152.75 apiece.
Source Link: Manappuram Finance stock jumps 10% as net profit grows 37% in Q2; brokerages remain divided | Mint