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Manappuram Finance Q1 net rises 26pc to Rs 417cr

A counter to watch for a medium term gains.

Gold Finance companies like Muthoot, Manappuram etc., are good business models unlike banks as they offer fully secured loans and hence their NPA is negligible. So they offer good prospects for a medium to long term investments.

Manappuram Finance on Tuesday reported a nearly 26 per cent rise in its consolidated net profit at Rs 417 cr for the Q1 of the current fiscal year 2021-22 on healthy growth in interest income aided by a fall in borrowing costs

The company had posted a net profit of Rs 332 cr in the same quarter ended June 2020.

Income from operations was up by 3.4 per cent to Rs 1,565 crore in Q1FY22 as against Rs 1,513 crore in Q1FY21, Manappuram Finance said in a regulatory filing.

Net interest income grew by 13.3 per cent to Rs 1,072 crore as against Rs 946 crore in year ago quarter. The cost of borrowing declined by 16 bps on a sequential basis during the April-June quarter, it said.

The company’s consolidated assets under management (AUM) fell by 2.3 per cent to Rs 24,800 crore as of June 30, 2021, from Rs 25,300 crore in the year ago period.

India’s number two gold financing company said its gold AUM during the quarter was down by 6.8 per cent to Rs 16,500 crore from Rs 17,700 crore; while the gold tonnage dipped by 16 per cent to 58.1 tonne from 69 tonne.

Gold AUM was impacted due to Covid-19, as many branches were either not functional or only partially functional leading to decline in new customer acquisitions. Borrowers also withdrew collateral due to Covid-19 stress, the company said.

Manappuram Finance said it exercised prudence in risk management by auctioning the high LTV (loan to value) portfolio over the last two quarters.

‘Proportion of high LTV portfolio of (over 80 per cent) had come down to 6 per cent. It has reduced due to better risk management.’ As prices of gold declined by 17 per cent from peak, it lead to some borrowers withdrawing collateral, it added. Non-gold AUM, however, grew by 8 per cent to Rs 8,200 crore from Rs 7,600 crore.

Provisions for bad loans were down by 16 per cent to Rs 122 crore for the quarter from Rs 145 crore a year ago.

The board of directors of the company has declared an interim dividend of Rs 0.75 per equity share of face value Rs 2, the company said.

Mainly a gold loan financier, Manappuram Finance has diversified into microfinance loans, vehicle and equipment finance, home finance, on-lending and insurance broking.

Shares of the company closed 4.85 per cent lower at Rs 191.20 apiece on BSE.

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