Manappuram Finance Pegged at Rs 315 by Motilal Oswal

Manappuram Finance Exceeds Expectations in Q4FY26

Manappuram Finance's consolidated profit after tax (PAT) witnessed a significant improvement, reaching approximately INR4.05 billion in the fourth quarter of fiscal year 2026 (Q4FY26). This represents a notable 58% beat over the previous year's corresponding period, when the company recorded a PAT of approximately INR2 billion.

Despite a decline in net interest income (NII) of approximately 3% year-over-year (YoY) to around INR14 billion, the company's operating expenses decreased by 6% YoY to approximately INR7.4 billion, which is 11% lower than estimated. Profit before provisions and tax (PPoP) grew by approximately 14% YoY to around INR7.8 billion, surpassing estimates by 22%.

Manappuram Finance's consolidated credit costs stood at approximately INR2.2 billion, which is lower than the estimated INR3.2 billion. The annualized credit costs for the quarter were around 1.5%, down from 2.9% in the previous quarter.

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The company is optimistic about sustaining growth in fiscal year 2027 (FY27), driven by strong momentum in gold loans, a robust franchise, and disciplined underwriting. Regulatory easing for branch expansion is expected to facilitate scaling up distribution, with the company planning to add around 500-550 gold loan branches in FY27. Partnerships and co-lending will also broaden its reach beyond branch presence. New offerings across consumption and income-generation gold loans and affordable housing are expected to aid in portfolio diversification.

In terms of performance, the company's Manappuram Finance is well-positioned for healthy asset under management (AUM) growth in FY27, backed by a calibrated approach in non-gold segments (microfinance and vehicle finance) and a stable operating profile.

Outlook

The stock trades at 1.6x FY27E price-to-book (P/B) ratio. Over FY26-28, we estimate a compound annual growth rate (CAGR) of 25% in gold AUM, 23% in consolidated AUM, and 66% in consolidated PAT. The consolidated return on assets (RoA) and return on equity (RoE) are estimated to be around 3% and 14% in FY28, respectively.

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We reiterate our Neutral rating on the stock with a target price (TP) of INR315, based on 1.5x FY28E consolidated book value per share (BVPS).