Manappuram Finance tanks on huge volumes

The stock has been more than halved from Rs 45.30 after the RBI had put a cap of 60% on the LTV ratio for gold loan

Manappuram Finance has tanked 13% to Rs 20.95, its lowest level since October 2009, on back of huge volumes.

As many as a combined 8.21 million shares have already changed hands on the counter till 1109 hours, against an average 3.4 million shares that were traded daily in past two weeks on the NSE and BSE.

The stock has been more than halved from Rs 45.30 on March 21, after the Reserve Bank of India (RBI) had put a cap of 60% on the loan-to-value (LTV) ratio for gold loan finance companies.

The research firm Emkay Global Financial Services its report dated April 26, said that around 7% of the Manappuram overall loan book is currently at 90% LTV or above, while another 24% of the book is between 80-90% LTV as on December 31, 2011.

The research firm cut assets under management (AUM) growth estimates from 40% earlier to 17.4% for FY13.

The company has grown its AUM by around 500% from fiscal 2010 to 2012, aided by significant branch expansion and almost 100% increase in gold prices during this period, the report suggests.