Manappuram Finance

Any view and guidance on impairment costs as it has been relatively increasing every quarter and last quarter profit dropped a lot comparing before provision and after provision profit .


Actually very good observsation provisions are increasing qoq and yoy
I didnt attended concall but surely it would have been discussed in concall

Business wise, Manappuram is running a solid business when it comes to Gold loan.

When loan is given against Gold, i.e. one of the most liquid & safest collateral, there is least probability of loss upon liquidation / auction when a gold loan turns NPA.

Also, they acquired Asirvad at the right time, just have a look in last 12 to 24 months, many NBFC operating in MFI, MSME lending etc. got listed and promoters / early investors made substantial returns.

However, Biggest issue with Manappuram is it’s promoters, few examples:

  1. Last year around same time Manappuram was in bad shape due to ED action on promoters because of their wrong deeds in another promoter owned firm - Impact - 65% external owner shareholders suffered bcz of an act of 35% promoter shareholder

  2. Manappuram Finance invested in Asirvad, however, promoters too invested in Asirvad in their personal capacity - Practically - Manappuram was fully capable of buying as much as possible of Asirvad, then why promoters bought in personal capacity - this again seems promoters not having pure intentions and poor governance act.

  3. During downturn of Microfinance industry, which occurs very frequently, be it due to unrest in some states, or natural calamities in different states, or unexpected event like covid-19, Asirvad was impacted badly - which impacted Manappuram too. But, during IPO of Asirvad gains for Manappuram will get limited … post listing whatever MCAP Asirvad will get - Manappuram holding will get holding company discount and on top of that low PE of Manappuram itself will further reduce the gain. Here, value unlocking like something similar to Listing of Nuvama wealth could have been done. Where let’s say whatever money Asirvad want to raise could be through fresh issue in IPO and whatever Manappuram own - could have been given to it’s shareholders in proportion of their respective shareholding. That could have been true value unlocking as well as fund raising for future growth.

  4. Company is giving regular dividends i.e. quarterly. Point is instead of dividend why can’t they do buyback of the same amount annually. Cash outflow point, there will not be any negative impact to company. But it could have substantial positive impact on market price, also on tax outgo for lot of investors. And above all, to promoters. But again, it’s promoters wish to have dividend and not the buyback.

  5. Relatively higher NPA in new loan segments i.e. Mortgages, Commercial Vehicle loan, unsecured Personal loan etc.

When compared to its closest peer i.e. Muthoot, it’s at half of PE, half of annual profit, and one-fourth of Market Cap.

All in all, based on personal investment experience, unless promoters act in much better way and hands over the MD&CEO position to a better & credible industry professional - such under-performance may continue in market returns for non-promoter shareholders, despite having solid balance sheet & underlying business. Or we wish a magic to happen like what’s ongoing in PSU’s, Infra, Railway, RE stocks.

Disclaimer: Holding Manappuram from last 5+ years.


Point No: 2 - promotors investing in personal capacity. This is just bad coporate governance. I couldn’t make out the management’s reply due to the bad audio quality of the concall.

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Intersting charts and data

Dividend ,EPS and BV going up
PE and P/book comimg down

Manappuram PE 6.98 x 2.5 = Muthoot PE 17.47
Manappuram P/book 1.32 x 2.2 = Muthoot PB 2.93

Gold price going up


with regards to Rights issue (calculations done only for 30/06/2023 issue, not for previous ones):

VP Nandakumar:
Shares subscribed: 16,012 Price:364; Total cost = (16012x364 = 58,28,368); Bonus Issue(26/08/2023): 2:1; Shares : 16012x3 = 48036. Total equity base: 200,283,372. Based on this Enterprise valuations at which Rights issue done: 2418 cr.

Shares subscribed by Manappuram in (4120879 no of shares) Rights issue: 4023144; Proportion: 97.62%. Current stake (pre-issue): 97.59%. Based on arithmetic, Manappuram subscribed to more shares it was entitled to, if minuscule in size.

Shares subscribed by VP Nandakumar in (4120879 no. of shares) Rights issue: 16012; Proportion: 0.388%. Current stake (pre-issue): 0.388%. Based on arithmetic, VP Nandakumar subscribed to similar shares it was entitled to (did not verify with higher decimal places).

Everybody is welcomed to form their judgements about valuations at which rights issue was done.
Promoters investing in personal capacity is also subjective, sometimes it is seen in positive light (skin in the game if not short changing others)
I was unable to find if VP Nandakumar took any remuneration or sitting fees. May be I missed it.

Disclosure: Invested.

PS: I would have liked if Asirvad got de-merged first and its shares were issued to minority shareholders. May be I would have sold my stake in Asirvad and practically brought overall cost of acquisition for Manappuram shares down. Similar to what happened in NMDC Steel de-merger and separate listing.


Management replied some other parties did not applied to rights issue (unclear whether he said they did not want to, but, he did say some due to cash constraints). So others over-subscribed.


if asirvad got listed separately then it will lose all the parental protection of manapuram including not able to expand operations through manapuram getting loans from parent and getting loans from third party at a discount and cross selling does not make sense to separate them except for short term gains in value as they say if you want to go faster go alone if you want to go further go together

other views are welcome


Sir , your answer seems quite philosophical…in terms common people understanding what is the best investor friendly way for Manappuram to list Asirvad? What are pros and cons of each way? Can you elaborate your views more clearly?

Tried to convert to text what I heard. It goes something like this.

“Promoters of Manappuram acquired the shares abdicated by the original shareholders during the rights issue- they don’t want to subscribe; they didn’t have the money. So whatever is the shortfall at the time of the rights issue, a portion has been acquired by Manappuram promoters.”

Given the fact that the promoters were acquiring the shares independently in Ashirvad starting from 2016, could there be any benign explanations for this which does not point out to bad intentions and conflicts of interest?



Interesting data points.

Looking at parameters like:
NPA level (less than 2%),
Price to Book (less than 1.5),
Price to Earning ( around 7),
Sales Growth rate (5Y around 15% CAGR),
Profit Growth Rate (5Y around 18% CAGR),
Solid Capital adequacy (around 30%)
PEG ratio less that 1
Return on Equity (around 20%)

It seems like an experienced techie from Tier-1 IIT but employed at a salary of ITI fresher.

But looking at it under-performance over last 5 years (when rest of stocks in Indian Stock Market has moved to sky) - it seems perception among the masses (those who matters like large fund houses, well known Indian Investors etc.) is not yet good for Manappuram in recent times.

And without good perception, how long it will be on similar valuations - remains a guess.

Note: Got this investment note from Mr. Rajeev Agrawal, dated 24/05/2021 i.e. exactly 3 years back, when MCAP of Manappuram in USD terms was $1.863 billion. At today’s rate of USD/INR … It seems those FII’s who invested 3 years back gained nothing other than dividends.

Look forward to a catalyst, which will rerate Manappuram.


Please correct me if my understanding is incorrect.

In case original shareholders (Mr. Raja and others) were not having money to subscribe Right issue, rather than Mr. VP Nandkumar & Mr. Babu subscribing those available rights, Manappuram too was eligible to apply for these available additional rights. And if Manappuram would have subscribed these, promoters would have got indirect benefit.

But subscribing direct, they got preference over rest of shareholders of Manappuram like FIIs, DIIs, Retail shareholders.

Here quantum of direct holding by Promoters vs that of Manappuram must not be that material when it comes to doing right things in right spirit & intention.


Not sure how all analyst came to a single price target of 220 plus minus 5
No difference of opinion
Or is it just copy and paste :smiley:by all national and international analysts


MGFL-RR-26052024-27-May-2024-895157100.pdf (1.0 MB)
Manappuram Finance Ltd - Q4FY24 Result Update - 27052024_27-05-2024_11.pdf (848.6 KB)

Even Axis Securities giving a target of Rs. 220 as per attached report from them.

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With current situation looks like psu banks will suffer in next 5 years
And now private banks and NBFCs will go up

Also spending money on rural area will increase.
Again positive for Manappuram

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Many positives for mannapuram but still market is not giving valuations
I remember same happened with amara raja batteries

Could you explain why PSU banks will suffer and pvt banks will gain?

The related party transactions are a mess, both figuratively (education, rent waivers, rent paid/received, etc.) and literally (very difficult to read, the scanned pages are sometimes partially scanned and some section is not scanned properly).


On 24 May 2021
The Doordarshi advisors said “We expect that the company should grow PAT by 15% CAGR over the next few years (management has guided for faster growth).”
So now that we have benefit of hindsight, you can compare the actuals and the projections, In FY22, PAT went down by 22.xx%, in FY23, PAT went up by 12%, in FY24 it then went up by 46%, now you get a smoothened version, overall PAT grew by 8.39% CAGR in the last 3 financial years (((2,197/1,725)^(1/(2024-2021)))-1)*100

So now, we know what must we do with projections! Lest we still remain uninitiated, here’s Charlie Munger talking on projections:


Minuscule Promoter buying in last 2 days
At price of 164 and 173