Manappuram Finance stock falls 12% over steep decline in QoQ profit

Shares of Manappuram Finance slipped 12 per cent to Rs 168.25 on the BSE on Wednesday after the company reported a consolidated profit after tax (PAT) at Rs 436.90 crore in the June 2021 quarter — down 8 per cent sequentially. The figure, however, was 18.7 per cent greater on a year-on-year basis.

The company missed Street expectations due to lower net interest income (NII). In Q1FY22, NII was up 13.3 per cent YoY but down 2.3 per cent QoQ. Provisions, too, were elevated at Rs 120 crore.

The gold loan book declined 13 per cent QoQ to Rs 16,500 crore and gold holdings slipped 11 per cent QoQ to 58.1 tonnage. Over the last two quarters, gold holdings have cumulatively declined 15 per cent and gold AUM 18 per cent over this period. In all non-gold segments, the respective loan books were flat sequentially.

The company said lockdowns during the months of May and June and branch closures adversely affected new customer additions (down by 36 per cent sequentially during Q1FY22). This has come back to normal levels since July/August.

Analysts at Motilal Oswal Financial Services said commentary from the gold finance NBFC suggests a strong uptick in demand and new customer acquisitions in July 21, which appears to have sustained in August-MTD’21 as well. "MGFL’s shorter tenure gold loan product (three months v/s the industry average of 6–12M) has led to higher auctions and withdrawals from customers, resulting in sustained decline in gold AUM/holdings over the last two quarters,” they said.