Manappuram Finance hits over four-year high; zooms 100% in 2016

In past one-and-half months, the stock rallied 62% after the company reported 87% growth in profit for Q4FY16

Manappuram Finance (MFL) has rallied 7% to Rs 63.85, its highest level since November 2011 on the BSE, amid heavy volumes.

Thus far in 2016, the stock zoom 116% from Rs 29.50, as compared to 3% rise in the S&P BSE Sensex.

Since May 12, in past one-and-half months, the stock rallied 62% from Rs 41.90 after the company reported robust 87% year on year growth in consolidated net profit at Rs 131 crore for the fourth quarter ended March 31, 2016 (Q4FY16).

Nirmal Bang Institutional Equities Research initiates coverage on the stock with a Buy rating and a target price of Rs 85, valuing it through a residual income model.

“With the worst-case scenario behind, regulatory environment turning favourable and gold prices stable, MFL is targeting healthy growth going forward. Its de-risking strategy has helped in keeping credit costs at a lower level,” analyst said in a report dated June 9, 2016.

Diversification into other segments will enable faster utilisation of excess capital on its balance sheet and avoid any undesirable treatment from the regulator for being a single-product company. Tier I capital in excess of 23% ensures unhindered growth along with no need to raise capital for the next two years, added report.

At 01:00 PM, the stock was up 5.5% at Rs 63 on the BSE as compared to 0.20% decline in the Sensex. A combined 8.34 million shares changed hands against an average sub six million shares that were traded daily in past two weeks on the BSE and NSE.