Manappuram Finance

MANAPPURAM FINANCE

Concall – Q1FY25

GOLD LOAN

But the demand has gone up. Our average ticket size remains around INR70,000 to INR75,000. From that class of customers, the demand started coming in. The ban on competition, I don’t think the effect is significant. Because even if it is there, it is getting distributed to so many players. And many of these are going to banks. Basically, the customer requirement has gone up. The demand for working capital, etcetera has gone up.

GUIDANCE – 15% this year. There will be growth in the number of customers also.

Gold Loan AUM has increased mainly because of demand increasing and their total live customers have increased…

During the quarter, we were able to add 4.21 lakh new customers and the number of outstanding customers has gone up to 24.5 lakhs from 23.76 lakhs

Online gold loan book stands at 70% of total AUM.

The gold loan AUM stands at INR23,647 crores, up by 9.11% Q-on-Q and 14.8% Y-o-Y.

MFI

For Asirvad, our Microfinance subsidiary, the AUM stands at INR12,310 crores, including gold loan AUM of INR1,016 crores;

The second thing, the gold loan also is coming to around 10% of the portfolio where you cannot expect, because that’s why the regulation also has facilitated the non-gold lending that has been enhanced from 15% to 25%. So, we have 520 branches as disclosed earlier.

Borrowing cost, at this stage, it is continuing at a similar level only. So, I think we are also expecting rate reduction, let us see, I think in September.

Other sectors

Most of them are secured .

House growing well. – Gnpas are a bit higher than other affordable housing companies….

Vehicle finance is also growing very well.

MSMe Gnpas have increased but the management is confident and a very small portion is unsecured.

My views on the Concall and the company

Management thinks that everything is related to heat waves, farmer loan waivers and elections and productivity loss.

Could be that the secured part of the portfolio may recover in the coming months.

I am more concerned about the MFI sector –

Many players in the MFI sector are talking about provisions and credit costs increasing and over leveraging in the industry.
On the other hand, the management did not say anything about this as there is an IPO which is on the way. They did not accept that there is over leveraging in the MFI industry only accepted that some states have problems.
Arman has been guiding for higher Credit costs for 2-3Q and even other MFI people(ujjivan,etc) are now accepting the same.

The management seemed optimistic about recovery in the MFI sector. .

Could be that Manappuram is resorting to top up loans as their AUM has increased and MFI customers have gone down and their GNPA has also reduced.

On the other hand there are not many MFI lenders whose GNPAs Have reduced.

Pros

They have a 8-9% gold loan AUM in ashirwad which will help them.

No state has more than 10% and no district has more than 1%.

Gnpas have reduced but i am not sure how to read this as it could be cause of top up loans.

The Company is cheap on a P/E basis and has the Gold Loan Portfolio which is a very high yielding product with NO Credit Costs.

I am a bit confused on whether the MFI business will bite manappuram in the back.
Where as I am very interested in the Gold(as growth has just come back) and other Lending Products(Growing very fast)

Everyone please feel free add your views on the business.
@maheshkumar – you have been tracking this business very well for quite sometime.

Disc – Invested.
Sold Some shares Recently…