Manappuram shares slump on profit worries

Reuters Market Eye - Shares in Manappuram Finance Ltd extend falls, dropping 10.8 percent, after the company said on Tuesday it expects an "under recovery" of revenue on certain gold loan portfolios due to a correction in gold price.

The under recovery may result in a reduction in profit numbers for the January-March quarter, Manppuram said, sending shares down 20 percent in the previous session.

Bank of America-Merrill Lynch downgrades the stock to "underperform" from "buy", and reduces its target price to 20 rupees from 48 rupees, citing higher-than-expected under reoveries.

"Guidance has been inconsistent and the risk to future earnings is high," BofA-ML says.

Manappuram's peer Muthoot Finance Ltd falls 4.3 percent on fears that its profit growth may also stall, dealers say.

(Reporting by Abhishek Vishnoi)