Brokerages maintained their bullish view on
Manappuram Finance after it reported nearly 44 per cent rise in net profit at Rs 398.20 crore for the quarter ended March 2020 on robust interest income.
While retaining a ‘Buy’ rating, BOB Capital Markets revised the target price downward to Rs 150 (Rs 225 earlier). “We have raised FY21 and FY22 earnings estimates by 4-6 per cent but cut the target price as we see incremental asset quality pressure in microfinance institutions (
MFI) and vehicle financing businesses,” it said.
Shares of the non-banking finance company traded 3.41 per cent up at Rs 127.20 at around 10.40 am (IST), while the benchmark
BSE Sensex was down 284 points or 0.91 per cent at 30,838.
Total income during the quarter increased to Rs 1,618.15 crore as against Rs 1,166.51 crore a year ago.
Manappuram Finance also said its board has approved increasing the overall borrowing limit to Rs 30,000 crore from Rs 25,000 crore, subject to shareholders’ approval in the ensuing Annual General Meeting.
Prabhudas Lilladher reiterated ‘Accumulate’ rating with an upward target price of Rs 142 (Rs 130 earlier). The brokerage house added that the pandemic situation puts non-gold business to litmus test as 100 per cent MFI book, around 50 per cent of vehicle finance and 40 per cent of housing finance (HF) fall under moratorium.
“With Covid uncertainty looming large and management citing caution, non-gold segments are expected to witness stress on growth and asset quality. Against this backdrop, we prune down EPS estimates by 13-14 per cent over FY21-22E. While non-gold mix face challenging business cycles, gold business traction stands supported by gold price uptick,” Prabhudas Lilladher said.