Decent quarterly numbers from Manappuram
Core Gold Loan business profitability is reduced.
However, Micro finance business has turned positive and has compensated reduced margin from gold business.
Need to understand the dynamics affecting gold loan margin, though loan business has increased…
Good loan assets is up about 20% YOY but not sure whey revenue growth in gold loans is so low YOY. As far as I know they don’t change their interest rates very often. Anyone know why?
https://www.timesnownews.com/videos/news/business/v-p-nandkumar-of-manappuram-finance-speaks-gold-loan-book-in-fy19/6277 in the above interview apart from the growth there is talk about listing of asirvad next year, also a small stake sale of the same ( towards the last few min of the interview)
Gold prices sink to 19-month low amid strong dollar
https://timesofindia.indiatimes.com/business/international-business/gold-prices-sink-to-19-month-low-amid-strong-dollar/articleshow/65420492.cms?utm_campaign=andapp&utm_medium=referral&utm_source=other
Can someone explains… Is low Gold Prices how it Impacts Manapparam business model… Will it be positive or Negitive??
Gold prices should not impact Manapuram unless the fall is very rapid. Almost all loans have a 3 month tenure and are against LTV(Loan to Value) of 75% or lower. This means that loan amount will always be less than 75% of the equivalent gold value. This means that Manapuram is protected from small to medium falls in Gold prices. As long as the fall is not greater than 15-20% in 3 months they are safe as they have collateral value more than the loan + interest.
The ongoing floods will impact the next quarter.
Especially the sme loans
Any idea how much business they do in kerela
Manappuram is mentioned in the news item above
the most impacted will be insurance companies since Kerala is one of the most educated with high per capita. I think insurance penetration would be high. Natural disasters particularly floods is one reason many lending institutions stay away from North Bihar and some regions of UP. Now this has come to Kerala. Let’s see how does it pan out for NBFCs and banks. Manappuram’s CV, SME and MicroFin biz will be impacted but these segments are still small compared with gold loans. As the article suggests, Muthoot Capital Serv will be impacted more than others.
Can someone post his/her research note on kerala flood impact on Manappuram in term of Business loss and spike in NPA especially Ashirwad MFI? We need to monitor this
In my view for long term investors and even for markets, these things doesnt matter as it does not alter the fundamentals of the business. If there is any downside due to this, smart investors will jump in to accumulate these stocks
As long as there is “Gold” as collateral, nothing to worry due to adequate margin of safety. Infact, lending will increase at this point of time as ppl may be in immediate need of cash due to re-building of properties and business as well.
Disc. Invested as core portfolio. Will be investing more if there is going to be panic fall.
Well Said.
however, concern may be on non-gold loans and especially microfinance portion.
hope the dependence on single state is limited wisely to take care of such events/disaster.
How much Aashirwa MFI exposure in Kerala…any idea?
I am not sure of the monetary impact but these kind of events highlight risk associated with high customer concentration in a specific region. I feel market does not like to give high valuations due to these risks. Have seen this geography concentration risk impacting Repco Home (Tamilnadu) and Canfin Homes (Karnatka) due to slowdown in those particular states though for entirely different reasons. Disc: No Holding
edelweiss AR 18 talks about pg 30 talks about how difficult it was for them to get into the gold loan business , implying the entry barrier to get into this business
Confluence of bad news – breaking down of Gold due to USD strength, Kerala flood and rising interest rates. Not sure about the impact of the flood on Microfin but other two should not have big impact.
7% business from Kerala
Out of this 75% is gold loan (which is very much secured kind of loan )
Risk is mainly in Microfinance sector but it’s only 2% of consolidated business
Possibly spurt in gold and Microfinance loan demand in Kerala
Some risk to Microfinance