Manappuram Finance

This is a fast-paced retail business where customers take out loans for acute short-term needs, typically lasting 2-3 months. Interest rates are less important than convenience, which is where NBFCs have an edge over banks. Customer loyalty is low, and borrowers prioritize quick access to funds and repayment. They often turn to local lenders or NBFCs for speedy loan processing. This differs from long-term housing loans, which require more consideration. Given the operational challenges and lack of customer loyalty, larger players like banks are typically not interested in this segment. Nonetheless, the sector has proven resilient due to its focus on speed and service, and NBFCs with their quick access and excellent service have become a preferred choice for short-term loan borrowers

I feel that by this time next year, banks will have lost their momentum and will shift their focus towards large-scale lending. They are unlikely to dedicate significant resources towards retail lending due to the inability to sustain high-quality service standards in this segment.

There are borrowers who seek a reputable brand when obtaining an emotional gold loan, with Manappuram and Muthoot being trusted names in the industry after operating for several decades. Such borrowers may be hesitant to approach new or unfamiliar businesses for gold loan services. Additionally, borrowers may opt for local lenders whom they have known for many years and trust to safeguard their gold. Market participants will acquire customers based on their specific criteria, and all are likely to thrive and expand their market share. Banks, for instance, will concentrate on attracting high-value, long-term loan customers, while other players will target different segments of the market.
At present, Manappuram’s stock is trading below its book value, implying that the entire business is undervalued relative to its total worth. The market appears to be overlooking the value of the company’s long-standing brand, operational expertise, diverse customer base, experienced management team, and other factors. Consequently, Manappuram’s share price has fluctuated significantly from 52 week to 52 week, resulting in a roller coaster ride for investors. Nonetheless, these fluctuations present opportunities for traders to capitalize on market movements.