Manappuram Finance expects non-performing assets falling this FY

Writes off NPAs worth Rs 71 crore in MFI biz

After witnessing rise in stress on loan book in Q1FY25, Manappuram Finance Ltd (MFL) expects gradual reduction in non-performing assets (NPAs) in the remaining part of the financial year as borrowers resume clearing old dues and pay regular instalments. Its gross NPAs rose in micro-finance, housing, vehicle, MSME, and personal loans on a year-on-year (Y-o-Y) basis.

V P Nandakumar, MD & CEO of MFL, in a post-earnings analyst call said the situation changed as heatwave affected productivity of the people (loss of man days) across sectors. There will be some delay in borrowers beginning to pay regular instalments as well as clear old dues. They are genuine customers, who had been paying promptly, Nandakumar added.

The gross NPAs have peaked and should come down, he said, without indicating the level the company was targeting by the end of March 2025.

At the consolidated level, the company’s provision for bad debt rose by 88.6 per cent Y-o-Y to Rs 2,286 crore in Q1FY25. Sequentially, it rose by 21.7 per cent from Rs 1,878 crore, according to an analyst presentation.

As for micro loans run through Asirvad Microfinance Ltd, there are certain challenges in collections due to factors like farmers’ agitation (Punjab and Rajasthan), and general elections. There were some rumours about loan waivers, he said.

The company has written off Rs 71 crore of NPAs in the MFI segment. The portfolio recorded 21 per cent Y-o-Y growth in assets under management (AUM) of Rs 12,310 crore at the end of June 2024. Asirvad MFI is slated for listing and roadshows for the proposed IPO have already begun.

Referring to the outlook for growth, Nandakumar said gold loan will grow 15 per cent and non-gold loan portfolio will rise in a similar way.

At consolidated level, the company’s AMU rose by 21 per cent to Rs 44,932 crore and the gold loan book expanded by 14.8 per cent Y-o-Y to Rs 23,647 crore at the end of June 2024.