Manappuram Finance

Here is my observation from Manappuram’s concall. Management mentions that gold loan demand was buoyant until November and then it suddenly disappeared for low ticket sizes (which offer higher yields).

To bring back AUM growth, company had to focus on high ticket size loans which comes at lower yields. On top of this, they offered extra incentive to employees to boost collections and spent additional money on advertising to try to boost demand.

This additional advertisement didn’t bring much fruit as there was no return of demand (for lower ticket segment) until February.

What I found interesting was the stock price movement in this time frame. Stock started falling from mid-November (which coincided with demand evaporation) from 220 levels to 145 in January. The next leg of de-rating below 140 coincided with the results. This probably implies that there are two set of market participants, one who got a whiff of this demand evaporation in November itself and the other ones who reacted post bad results.

Disclosure: Invested (position size here)


When other gold Nbfc is making 17% yield. Why should Manapurram continue to make 25%+ Yields? This is where incremental direction counts. Manapurram is likely to be a value trap as incrementally the return ratios will trend downwards with elevated marketing spends and reduced yields. Valuations are too cheap.

Let’s see how it goes.

Disc;- not invested in manapurram.


Google trend gives a good picture to extrapolate gold loan demand in India


Found something interesting on Twitter:

Basic number presentation


Not a video specifically on Manappuram Finance but has its comparison with Muthoot and IIFL from 21:00 onwards. Decent video


Staffers of Manappuram gold finance held for fraud.


The rating reaffirmation continues to factor the experience of promoters and professional management, Manappuram Group’s established track record, healthy asset quality, comfortable capitalisation, strong financial profile and adequate risk management and management information systems. The rating is, however, constrained by the inherent risks associated with the gold loan and non-gold loan portfolio, coupled with regional concentration risk.


Very interesting field visit report (Hyderabad and Vizag) from Motilal about competition among gold loan NBFCs, I have attached the relevant excerpts at the end.

Summary: Competition is intense between Manappuram, Muthoot and IIFL. Each company is trying to poach high value customers by offering very low teaser rate loans (0.6% monthly interest) which are applicable if one pays monthly EMI. Apparently, 75-80% of customers who take these teaser loans end up not paying monthly interest and are moved to a higher interest rate slab. There is lot of flip flop happening where companies are changing the terms and conditions of these teaser rates abruptly resulting in very high balance transfer for high ticket sizes. Basically, these high ticket customers do not have any stickiness and have a plethora of options to avail loans.

Disclosure: Invested (position size here, no transaction in last 1-month)


Interesting update from B&K–

Seems Manappuram is losing market share. Let’s see if this is a deep value trap for years to come or a deep value buy. Taking decisions and shifting seems to be working out here atm


So Manappuram made another 52 week low today at 103. If one looks at the price chart, the company had touched a similar price for the first time in 2016. Let’s compare some numbers between that time and today.

2016 - 2369
2022 (Expected) - 6202

Net Profit
2016 - 353
2022 (Expected) - 1536

Book Value
2016 - 2758
Sep 2021 - 7970

So effectively while the Book value has gone almost 3x, Revenue 3x and Net Profit 5x you are getting this business for a similar price. So at 1.1x Book value one gets an NBFC with with consistent 25%+ ROE, 5 year Sales Growth of 22% and PAT growth of 37%. Also, most importantly negligible NPAs over the years (baring exceptional circumstances)

This past year has not been the best for Manappuram and there is talk of it losing market share to other NBFCs but we will need to monitor the situation for a few quarters or a year or two to actually see the long term impact it can have. The unorganized sector of Gold based lending is still so huge that there may be enough room for multiple players to go. I think at 1.1x book value, a lot of the pessimism is already priced in.

Manappuram is still a strong brand name with years of great execution behind it. The narrative has changed with the fall in stock price (from gold loan being the safest kind of NBFC to suddenly having no moat) but I believe the business quality is still very good. Plus whenever the Microfinance cycle turns, it will benefit a great deal from that as well (Asirvad is one of the largest and well diversified MFIs in the country).

All in all looks like a heads I win, tails I don’t lose much situation.


I would not look at 5 year CAGR as its after COVID when competition got aggressive in the market (losing market share proves that). Past few quarters (barring the last one, even there the growth came at the cost of margins) Manappuram has performed poorly compared to peers, which brings in doubt in execution skills plus doubt on whether its a strong brand or not.

Unorganized market opportunity is huge but it is difficult to track whether management is focusing on the same. They already have more than 4000 branches therefore, even if incremental branches are opened up in tier 3-4 cities to fight unorganized sector there is a barrier of approval from RBI which will not allow it to growth fast.

Disclosure: Invested.


Thanks everyone for great additions to the thread.

Wanted to understand in detail why Manappuram is loosing market share and why are people preferring other Gold loan lenders? One reason I can understand was their gold auction tenure of 3 months which they have bumped up.