Buy Manappuram Finance, target price Rs 260: ICICI Securities

ICICI Securities has a buy call on Manappuram Finance with a target price of Rs 260. The current market price of Manappuram Finance is Rs 235.2. Manappuram Finance, incorporated in the year 1992, is a Mid Cap company with a market cap of Rs 19898.83 crore, operating in the NBFC sector.

Manappuram Finance's key products/revenue segments include Interest, Other Operating Revenue, Income From Financial Services, Dividend, Fees & Commission Income and Income From Sale Of Share & Securities for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 2562.63 crore, down -2.83 % from last quarter Total Income of Rs 2637.14 crore and up 10.14% from last year same quarter Total Income of Rs 2326.68 crore. The company has reported net profit after tax of Rs 278.46 crore in the latest quarter.

The company's top management includes Mr.Shailesh Jayantilal Mehta, Dr.Sankaran Nair Rajagopal, Ms.Pratima Ram, Mr.T C Suseel Kumar, Mr.Abhijit Sen, Mr.Harshan Kollara, Mr.P Manomohanan, Mr.V R Ramachandran, Mr.V P Seemanthini, Dr.Sumitha Nandan, Mr.V P Nandakumar, Mr.E K Bharat Bhushan. Company has MSKA & Associates as its auditors. As on 31-12-2024, the company has a total of 85 crore shares outstanding.

Investment Rationale
ICICI Securities' SoTP-based target price for Manappuram Finance stands at Rs 260 (unchanged), based on 1.4x P/B for gold, 1x P/B for MFI and 1.1x P/B for home finance/other business on FY27E BV. We factor in AUM growth of ~16%/12%/12% in gold on standalone basis in FY25/26E/27E (~14% end-to-end growth in 9MFY25). For MFI, the brokerage factors in a decline of 14% in FY25E (decline of ~16% end-to-end in 9MFY25) and growth of ~12% each for FY26/27E. For home finance business, AUM growth of 25%/22%/20% in FY25E/26E/27E (~18% AUM growth in 9MFY25). I-Sec factors in AUM growth of ~9%/14%/13% on consolidated basis for FY25/26E/27E (vs CAGR of 17.8% in FY18-FY24 and 5% in 9MFY25). They model in standalone ?NIM/opex/credit cost to AUM estimates at 14.5%/5.9%/0.5% for FY26E and 14.4%/5.7%/0.4% for FY27E. This leads to standalone RoAE of ~16.8%/17.3%/17.6% in FY25/26E/27E (RoAE at 17.2%/16.7%/17.4%/16% in FY24/ Q1/ Q2/ Q3FY25). For Asirvad, the brokerage has factored in RoAE of -4.6%/0.5%/8.9% for FY25/26E/27E (RoAE of 18.2%/13.1%/-33.6% in Q1/Q2/Q3FY25). This results in consolidated interest income/pre-provisioning profit/PAT CAGR of 11.3%/7.7%/8.2% between FY24-27E (vs CAGR of 16.6%/19.1%/18.8% between FY19-FY24). The consolidated RoAE stands at 14.6%/16.2%/17.6% for FY25/26E/27E, respectively.