Previously management gave 20% aum growth guidance
Now post corona many NBFCs will be wiped out
Those who stand out will come out more strong
Let’s see who can survive
I think ,Corona situation should improve by the end of summer by June July
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Any idea why was he saying 85% of their loan book is Gold loans whereas it is only 67%?
I think he was talking about standalone. Hence said 85% gold loans.
Has Manappuram Finance given corporate guarantees to loans taken by Asirvad Microfinance?
Can someone throw more light on the issue?
I checked the annual report of Manappuram and did not come across any such disclosure
In particular, I checked the following
- Loans given to subsidiaries (Note 61)
-
Related Party Transactions (Note 42 to standalone statements)
-
Contingent Liabilities (Note 41)
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Investment Rationale
According to the brokerage, there is minimal asset quality risk in Manappuram’s business as gold loan has a huge share in the total loan portfolio.
The brokerage expects the asset quality in its MFI business to deteriorate materially in the near to medium term.
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Banks & NBFC are new sectors for me, so trying to understand business models,
I have few queries request experts to help me out,
as gold is their liability & not asset,
- What happens to stock price when gold rates go up?
- what happens to stock price when gold rates come down?
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Finding a relationship between stock price and gold prices is a futile exercise. Instead, you can scroll through the thread to understand what happens to the gold loan business when gold prices go up or down.
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Naveen Kulkarni, Chief Investment Officer, Axis Securities Ltd likes ICICI Bank and Kotak Mahindra Bank look attractive. “In the NBFC space, Manappuram Finance looks attractive. Apart from BFSI, our key focus sectors are FMCG, IT, Pharma and Telecom,” he said.
30% of their folio is into MF and Vehicle finance. MF can go for a toss. Did CARE mentioned anything on the same. Can you provide full link to the doc
Demand for gold loans may rise in the aftermath of the lockdown as the risk profiles of borrowers deteriorate and lenders become risk averse,” V.P Nandakumar, managing director of Manappurram Finance, said in an interview. “With many non-bank finance companies facing liquidity challenges, lending will be further constrained and gold loans may then become the fall-back option for borrowers denied access to their regular channels,” he said, adding gold loans may grow 10% to 15% this year.
About 1.2% of India’s total gold stock has been pledged as collateral for loans, leaving huge potential for the market to grow, consultancy firm Cognizant said in a note in January.
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As per last annual report. Covid has created problems but looking at this level of C.A.R in MFI segment it does not look as Manappuram should face liquidity / solvency issue.
Max articulated risk in MFI space may be that’s why stock dropped hard in recent carnage.
Only time will tell
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Another Insider Trading violation episode. This is the 4th time, 4 new offenders added to the list. Still all 1st time offenders, small quantities.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/3ea3fd0b-2833-4808-ac47-44109fab7221.pdf
With respect to solvency issues in distress times.
As per 2019 (old) Report. Gold holdings @ 67.5 Tons. 1 ton approx 410 Cr (Taking 41000 gold rate).
67.5 Tons = 27675 Cr.
Market Cap of the company today 10500 Cr.
Gold AUM % in Consolidated AUM is 67%
MFI AUM % in Consolidated is 19.5%-20% approx.
Even if the 20% portion of business yields subdued returns for next 2 -3 -4 qtrs. The business doesn’t look like going under as there is ample margin of safety. They should be steady and doing more business 5 years from now. Valuations are one’s personnel assessment.
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Would this mean reduced business as customers may prefer to sell to Government?
This is mainly purchase, Usually gold in India has a sentimental value and they prefer to hoard it and pass it to the future generations. So they may use it as collateral to get a loan and then on repayment they get the gold back! But this obviously has a certain impact which I don’t think will be very huge. Last when I read their average ticket size was under 50k, so for such an amount no one would want to get rid of their family gold is what I believe
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I recollect gold monetization scheme which was announced few years back without much success. Gold ornaments will be melted and checked for purity and effectively cash in hand is much less than what you paid for jewellery which is big turn off for majority people. Rather they pawn and get money for immediate needs. Unless one has 99.99% purity gold coins and bars which you want to get rid off these scheme won’t make sense.
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