At a Glance
Manappuram is India’s second-largest gold loan NBFC — and unlike your local jeweller uncle, they have 5-year CAGR credibility. But after a dream rally, FY25 ended with a shocking quarterly loss. Blip or warning? Let’s melt it down.
1. 🧱 The Business: 70% Gold, 30% Ambitions
Manappuram Finance = your friendly neighbourhood pawnbroker + NBFC ambitions.
Core Segments:
- Gold Loans 🪙 (70% of book): Short-term, secured lending. Margin-heavy, risk-light.
- Asirvad Microfinance 👩🌾: Big rural borrower base, also contributed to recent volatility.
- Others: Includes vehicle finance, LAP, and housing loans.
🏦 They operate pan-India with 5,000+ branches, but gold dominance = Southern stronghold.
2. 📉 The Quarter that Shocked Dalal Street
Let’s go straight to March 2025 numbers:
| Metric | Q4 FY25 |
|---|---|
| Revenue | ₹2,360 Cr |
| Net Profit | -₹203 Cr ❌ |
| EPS | -₹2.26 |
| Financing Margin | -7% |
What went wrong?
- Provisioning due to stress in microfinance
- Spike in operating expenses (₹1,638 Cr, up 80% YoY)
- Core margin tanked from 35% in prior quarters to negative territory
This was their first quarterly loss in a decade.
Manappuram basically tripped on its own loan book — while trying to sprint.
3. 📈 Long-Term Financials Still Sparkle
| FY | Revenue (₹ Cr) | Net Profit (₹ Cr) | ROE | EPS |
|---|---|---|---|---|
| FY21 | 6,331 | 1,725 | 26% | ₹20.37 |
| FY22 | 6,061 | 1,329 | 17% | ₹15.70 |
| FY23 | 6,700 | 1,500 | 17% | ₹17.67 |
| FY24 | 8,848 | 2,197 | 21% | ₹25.86 |
| FY25 | 10,041 | 1,173 | 10% | ₹14.37 |
🧠 So despite the shocker in Q4, FY25 revenue hit a record high of ₹10,000+ Cr.
But net profit nearly halved.
4. 🔬 Peer Comparison: Value Pick or Gold-Plated Trap?
| Company | P/E | ROE | Price | GNPA | Dividend Yield |
|---|---|---|---|---|---|
| Bajaj Finance | 33.8x | 19% | ₹905 | ~1.1% | 0.49% |
| Muthoot Finance | 19.6x | 17% | ₹2,606 | ~2.5% | 1.00% |
| L&T Finance | 18x | 9% | ₹190 | ~3.2% | 1.45% |
| Manappuram | 19.6x | 10% | ₹271 | ~2–3% est. | 1.31% |
🔎 Verdict: Manappuram is trading at a similar valuation to Muthoot… without the same stability.
ROE <12% in gold lending = a red flag, unless you’re growing like crazy. Which… they’re not anymore.
5. 📊 Valuation: Cheap Enough to Tempt, Risky Enough to Burn
As of June 2025:
- Market Cap: ₹22,976 Cr
- P/B: 1.8x
- P/E: 19.6x (based on FY25 EPS of ₹14.37)
- Dividend Yield: 1.31%
Let’s calculate fair value.
📌 Fair Value Range:
- EPS-based: ₹14.37 EPS × 12–15x P/E = ₹172 – ₹216
- Book-based: ₹147 book value × 1.5–2.0x P/B = ₹220 – ₹294
🎯 Fair Value Range = ₹200 – ₹260
It’s currently at ₹271 → slightly overvalued based on this year’s numbers, unless a strong profit rebound happens in FY26.
6. 🏗️ Asirvad Microfinance: The Stress Layer
The ₹500 Cr rights issue into Asirvad Microfinance (at ₹60/share) was meant to shore up capital.
But that business has been under stress due to:
- Political disruptions
- Rural NPA spikes
- Volatility in East & North-East India
So while Manappuram’s gold loan biz is stable and cash-flow rich, the microfinance arm is bleeding margin and trust.
7. 🚨 TL;DR — Golden Goose or Golden Goosebumps?
✅ Positives:
- Second-largest gold NBFC
- Strong long-term EPS record
- Good dividend payout (avg 18%)
- Low-cost borrowing advantage in southern India
❌ Negatives:
- First-ever quarterly loss (Q4 FY25)
- ROE dropping from 20%+ to 10%
- High exposure to volatile MFI sector
- Stock may be pricing in a quick turnaround that hasn’t materialized
💡 EduInvesting Take:
This is not a pump-and-dump. Manappuram has survived NBFC liquidity crises, IL&FS, and demonetisation.
But it’s currently stuck between “cheap” and “why is it cheap?”
If gold prices fall, or MFI stress continues — expect volatility to remain. If FY26 bounces back to ₹2,000 Cr PAT — this could turn into a stealth compounder again.
Until then?
Only investors with a spine of steel and heart of gold should enter.
✍️ Written by Prashant | 📅 June 23, 2025
Tags: Manappuram Finance, NBFC stocks, gold loan, MFI, Asirvad Microfinance, quarterly loss, EduInvesting, fair value range, financial stocks, FY25 results
