Manappuram Finance hits fresh all-time high; surges over 50% in 2019

Shares of Manappuram Finance hit a new high of Rs 141, up 5 per cent on the BSE in intra-day trade on Tuesday on the back of heavy volumes in an otherwise subdued market. The stock surpassed its previous high of Rs 139 recorded on May 24. At 09:54 am, the S&P BSE Sensex was down 0.10 per cent at 40,225 points.

The counter has seen huge trading volumes with a combined 5.45 million shares changing hands so far, as compared to around 5 million shares that were traded daily in past two weeks on the BSE and NSE.

Thus far in the current calendar year 2019, the stock has rallied 52 per cent, as compared to a 12 per cent rise in the benchmark index.

For March quarter (Q4FY19), Manappuram Finance had reported strong growth in net interest income (NII) of 18 per cent year-on-year (YoY) due to strong assets under management (AUM) growth of 23 per cent YoY. Net profit growth has been a strong 43 per cent YoY at Rs 259 crore.

“Manappuram has been immune to the ongoing liquidity crisis given its assets liability mismatch (ALM) profile and robust profitability. In our view, it will continue to act as a ‘safe haven’ with stable business trends,” analysts at YES Securities said with 12-month target price of Rs 148 per share.

The non-banking finance company’s growth has been driven by non-gold loan segment as this segment has been growing at more than 50 per cent growth since last few quarters as per the diversification strategy of the management to reduce the concentration risk whereas the gold loan business growth has moderated to average run rate of 10 per cent in last few quarters.

“Despite the liquidity pressure, growth is unlikely to hamper in near term due to its short-term asset’s maturity profile. Due to diversification of the book, yields are likely to impact. However, on the cost front, RBI's latest notification on credit rating-based lending will also have positive impact on cost of fund,” analysts at Narnolia Financial Advisors said in result update. The stock was trading at brokerage 12-month target price of Rs 140 per share.