Manappuram Finance projects FY24 loan book growth at 20%

Kerala-based non-banking finance company (NBFC) Manappuram Finance is aiming for consolidated loan growth of about 20% with 7-8% growth in gold loans for the financial year 2023-24 (FY24).

VP Nandakumar, Managing Director and CEO, said the company is expanding in the non-gold sectors, particularly in MSME car finance and commercial vehicle finance. "These secured businesses are growing simultaneously with our Asirvad Microfinance subsidiary showing robust growth as well," he told CNBC-TV18.

Asirvad provides loans to women from low-income group that they can use to generate income and achieve financial stability.

To mitigate the cyclicality in the gold loan segment, Manappuram Finance has been actively diversifying into non-gold segments, with the share of non-gold products in the firm's asset under management (AUM) mix at 47% at the end of Q2 as against 37% a year ago.

In the second quarter there was robust growth in the shadow lender's assets under management, although the loan share of gold declined. Nandakumar said gold this quarter was flat as the festive period might have led to higher redemptions. Usually, during festive periods, customers tend to pay off their loans to retrieve their gold items from financiers.

Nandakumar intends to achieve an ideal 50:50 loan mix; 50% gold and 50% non-gold.

The company's cost of funds is 8.5%, said Nandakumar, adding that the average duration of loans is three months, and the average ticket size for gold loans is ₹15,000.

Analysts at global brokerage firms have maintained a bullish stance on the Manappuram Finance stock following a strong second quarter show. Foreign brokerage Morgan Stanley retained an 'Overweight' and raised its target price to ₹200 from ₹183 per share. Morgan Stanley sees upside risks to earnings, and more to valuation multiples. BofA Securities has a 'Buy' rating and a target of ₹182 on the stock. The primary focus will be on profitability and portfolio diversification in FY24, it said.

The market cap of Manappuram Finance is ₹14,059 crore and it competes with industry rivals such as Muthoot Finance, Bajaj Finserv and IIFL Finance.