Manappuram Finance

The news announcement came along with last quarter results but he was supposed to continue with the company until a new CFO is identified. I was looking for an update on identification and appointment of new CFO - the role of CFO is one among the most critical management responsibility for any company considering we as investors trust and rely on him along with his team to report numbers which are reliable. Any delay in replacement of CFO would be a significant risk that all of us here will have to price in sooner than later. Hopeful of this being done soon considering companies act(section 203(4)) makes it mandatory to replace the incumbent within a period of 6 months from the date of vacancy.

Disclosure: Invested.

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VP Nandakumar’s interview with ET now

There is a RPT capital infusion planned, waiting for more details to emerge. Its both in Home finance and in Asirvad Microfinance

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MFS’s debt issue is fully subscribed for the minimum amount of 200cr now let’s see if they could garner 1000cr by 22st Nov.

https://beta.bseindia.com/markets/publicIssues/DisplayIPO.aspx?id=1731&type=DPI&idtype=1&status=L&IPONo=3805&startdt=10%2F24%2F2018

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Not sure what’s this about and almost 5% drop today
May be due to the sensex which cracked today

Regulation 29(1)(d) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), we wish to inform you that the meeting of the Financial Resources and Management Committee of the Board of Directors of the Company will be held on Tuesday, December 11, 2018 inter- alia to consider and approve the issuance of the Private Placement of Unrated, Unlisted, Secured, Redeemable Non-Convertible Debentures.

May because they could not raise the required amount from their public ncd, hence going for private route for raising funds

Probably it fell showing sympathy with Muthoot after it reported average set of standalone Q2 nos. I think Manappuram should show out performance now after blowout set of Q2 nos.


Asirvad reached 3000 cr aum . Having incremental growth of 100 cr every month for past 5 months. to reach 3500 cr by year end

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Ashirvad microfinance securitises Micro Finance Portfolio

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Came across this article here that mentions an IPO for Asirvad Micro Finance subsidiary of Mannappuram. Can veterans of VP throw some light on how this would impact shareholders of Manappuram itself? Asirvad has been recently doing well and an IPO would mean dilution of stake for Manappuram - OR would this be something like a de-merger and shareholders of Manappuram would receive additional shares of Asirvad?

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Well, I have heard that Mr. Nandkumar is unwilling to exit gold loan biz which is a kind of cash cow. There are many who wanted to buy it though. Sentiment towards well run MFIs is improving after Indusind’s acquisition of Bharat Financial and now HDFC’s financial interest in Bandhan. It seems that he would like to monetise MFI biz at some point of time and focus on Gold, Vehicle and housing. In the long run he would face pricing pressure from SFBs and better to prepare accordingly. FYI, Mr. Nandkumar is a veteran of commercial vehicle finance and exited this biz reluctantly only during NBFC crisis of late 90s. I am sure he would build it again. For the next few years MFI will be a growth engine but it is better to focus on secured lending i.e. Gold, Vehicle and home finance in the long run

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Expecting over 20% consolidated growth

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Great Q3 results:

Q3 presentation:

Highlights:

  • Consolidated AUM growth: 3.4% QoQ 21% YoY
  • Consolidated Net Profit: 10.3% QoQ 41% YoY
  • 5.2% consolidated ROA, 23% consolidated ROE

Gold Loan:

  • AUM up by 10.6% YoY and down by 0.5% QoQ
  • Gold loan growth impacted by seasonal lumpiness in gold loans market, Gajacyclone and changes in certain operational processes
  • Improvement in gold loan net yields from 25.0% to 26.3% due to (i) full quarter impact of withdrawal of discount schemes in the last quarter, and (ii) yield optimization to pass on the increase in cost of funds

Asirvad Microfinance:

  • 51.3 % YoY AUM growth, 29.4% ROE
  • Plans to raise funds from PE to achieve targeted growth in the business

Other highlights:

  • Q3 FY19 was the first quarter when all of the lending products reported profits on a standalone basis
  • Security costs have halved from INR 44 Cr in Q3 FY18 to INR 22 Cr in Q3 FY19
  • C/I ratio in the standalone business has improved from 36.8% in Q3 FY18 to 32.9% in Q3 FY19
  • Did not face any significant liquidity stress during Q3 FY19. Undrawn Banking lines Rs 19,240 Mn
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Really impressive result from Manappuram. I think the biggest take away is a note give in the investor presentation which says "Plans to raise funds from PE to achieve targeted growth in the business ". While it is not clear whether this is going to be done at the parent level or specifically for Asirvad at the subsidiary level - it is really interesting, as any fund raised at a parent level will give us the kind of valuation multiple a PE is ready to place on the listed entity and if this is done at Asirwad level then that is a clear sign of them listing this entity in the near future.

Disclosure: Invested.
AJ

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Having begun its diversification in 2014, the company is well set to reap the rewards from here on.”

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What about asset quality ? I don’t see asset quality in results.

Investor Presentation has it(only stand-alone figures). You can refer to it.

No meaning of seeking defaults in gold loan. Once they declare loan assets in other areas, they must declare defaults too. Without looking for NPAs , no meaning to asses profit loss account sheet of finance company. Any profit can be declared by playing on provisional coverage ratio.

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Investor presentation has the NPA numbers:

Gold loan:

man1

Asirvad Microfinance:

man2%20-%20asirvad

Vehicle finance:

man4%20-%20vehicle

Home loan:

man3%20-%20housing

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