Manappuram Finance Ltd
Finance (including NBFCs)

FV – Rs 2; 52wks H/L – 55.5/19.75; TTQ – 3.96 Lakhs; CMP (May 31, 2016) – Rs 53.5;

Market Cap – Rs 4500 Crs

Financials and Valuations for FY16 (Amt in Rs Crs unless specified)

	Equity Capital	Net worth	Long Term Debt	Total Sales	PAT	BV (Rs)	EPS (Rs)	P/E	Industry P/E	P/BV	Promoter’s Stake	Beta
Consolidated	168.24	2758	1600	2360	353	33	4.2	12.73	51.98	1.6	33.69	1.13
Standalone	168.24	2737	1115	2213	337	33	4.01	12.75	51.98	1.6	33.69	1.13

 

Valuation Parameters

1. EV/EBITDA: 3.54
2. EV/Share: Rs 65
3. EV/Sale: 2.3
4. Market Cap/ Sale: 1.89
5. Debt to Equity: 0.58
6. RoE: 12.8%

• March quarter PAT stood at Rs 130.7 Crs on a consolidated basis, up by over 86.6% Q-o-Q. PAT for FY 16 was Rs 353 Crs, up by 30% Y-o-Y. The improvement came on the back of margin improvement due to a reduction in the cost of funds and improvement in yields, along with a stronger than expected growth in overall AUM. Cost of funds came‐off 10 bps Q-o-Q and 150 bps Y-o-Y due to a rating upgrade earlier in the year and lower base rates during the year. Yield has improved 190 bps Y-o-Y as Manappuram has shifted to shorter duration loans because of which the quantum of auction was lower. Auctions this quarter stood just at Rs 190 Crs (1.9% of gold AUM) aided by higher gold prices.
• The company’s consolidated assets under management also rose to Rs 11433 Crs from Rs 9593 Crs recorded in the previous fiscal year.
• The recent diversification into new business areas has gained further traction with new businesses now contributing about 12% of its consolidated AUM. Microfinance subsidiary, Asirvad Microfinance Pvt Ltd, had ended the year with an AUM of Rs 82 Crs, representing a growth of 210% over Rs 322 Crs.
• Commercial vehicle loans and mortgage-based finance (housing loans and loans against property) have contributed Rs 52 Crs to the total AUM. Their contribution in FY 15 was Rs 44.80 Crs.
• Manappuram Finance fiscal net profit up 30%
• NBFCs including Manappuram Finance are now targeting short tenure (3 to 6 months) gold loans instead of earlier one year duration loans. By focusing on short-term loans, auction of gold deposited by defaulting customers could come down. And, this helps in protecting margins. Apart from protecting margins, these shorter duration gold loans also help companies by shielding them against the volatility in gold prices that get more pronounced in longer duration loans. NBFCs, banks focus on shorter tenure gold loans to boost margins
• The company is now looking at increasing its non-loan portfolio. It is aiming at organic and inorganic growth to grow the non-gold loan business, now Rs 1300 Crs. In the next two to three years, it aims to grow it to Rs 4000 Crs. This is being done to reduce concentration risk from gold loans. The Reserve Bank of India has also said it wants large companies to diversify their portfolio, as a single business will lead to this risk. Manappuram Finance looks at inorganic growth to diversify business

 

Bulk Deals:

Date	Client	Transaction	Quantity	Traded Price (Rs)
26-Nov-2015	SMALL CAP WORLD FUND INC	SELL	8550000	22.30
26-Nov-2015	SMALL CAP WORLD FUND INC	SELL	8763979	22.31
15-Sep-2015	WF ASIAN RECONNAISSANCE FUND LTD	BUY	14700000	24.61
15-Sep-2015	BEAVER INVESTMENT HOLDINGS	SELL	12803803	24.55
11-Sep-2015	ASHISH DHAWAN	BUY	9004871	20.20
11-Sep-2015	SMALL CAP WORLD FND INC	SELL	14673614	20.23

 

Block Deals:

Date	Exchange	Quantity	Price (Rs)	Value (Rs Crs)	Time
13-05-2016	NSE	1108092	50.25	5.57	14:29
11-05-2016	NSE	1000445	41.45	4.15	10:40
02-03-2016	NSE	1500339	31.75	4.76	11:53
24-02-2016	NSE	652451	30.70	2	13:49
19-02-2016	NSE	2465727	31.50	7.77	13:18
19-02-2016	NSE	1690592	31.35	5.3	15:22
02-02-2016	BSE	2194355	29.05	6.37	13:01
02-02-2016	NSE	2003749	29.05	5.82	12:31
01-02-2016	NSE	858631	28.35	2.43	14:15
29-01-2016	NSE	2501236	28.35	7.09	10:38
26-11-2015	NSE	4728105	22.30	10.54	11:51
26-11-2015	BSE	8551000	22.30	19.07	11:51
26-11-2015	NSE	4037024	22.65	9.14	11:51
24-11-2015	BSE	952082	22.70	2.16	09:36
04-11-2015	NSE	2000000	23.80	4.76	13:45
04-11-2015	BSE	3500000	23.80	8.33	13:45
30-09-2015	NSE	1000200	24.00	2.4	10:26
22-09-2015	BSE	1051345	23.65	2.49	12:02
15-09-2015	BSE	4110917	25.00	10.28	11:09
15-09-2015	NSE	1200000	24.75	2.97	14:32
15-09-2015	NSE	738950	25.30	1.87	13:18
15-09-2015	NSE	1800022	24.70	4.45	12:27
15-09-2015	NSE	7701659	24.60	18.95	11:51
15-09-2015	NSE	3956068	24.60	9.73	11:09
15-09-2015	NSE	1013880	24.35	2.47	11:12
11-09-2015	NSE	4884641	20.20	9.87	11:12
11-09-2015	NSE	1987265	20.20	4.01	11:11
13-08-2015	NSE	701727	23.25	1.63	14:01
29-07-2015	BSE	900000	26.15	2.35	10:54
28-02-2015	NSE	2369136	34.75	8.23	15:18
19-01-2015	NSE	1000000	33.80	3.38	14:55

 

Overview:

• Manappuram Finance Limited is a non-banking financial company (NBFC).
• The Company provides a range of fund based and fee based services including gold loans, money exchange facilities, and others. It is also engaged in the housing finance owing to low loan defaults.
• It provides customers with credit primarily against their used gold jewellers.
• The Company’s business areas include gold loan, money transfer, housing finance and foreign exchange.
• It provides higher amount of loans depending upon the purity, net weight of the gold.
• The money transfer service is available in all the branches.
• The Company acts as a money changer, undertaking currency exchanges and sale of travellers’ cheques for a variety of purposes. It operates through 3,293 branches spread across the country.

Housing Finance: Manappuram Finance acquired Milestone Home Finance Company Pvt. Ltd. (Milestone), a company possessing a valid Certificate of Registration from National Housing Bank, as a wholly- owned subsidiary company. Subsequently, the name of company was changed to Manappuram Home Finance Pvt Ltd in September 2014.

Microfinance: Manappuram Finance acquired 85% stake in Asirvad Microfinance Private Limited. Asirvad Microfinance is an 8-year old NBFC – MFI (Non banking financial company – Microfinance Institution) headquartered in Tamil Nadu with operations in the states of Tamil Nadu, Kerala and Karnataka.

Management:

• Mr V P Nandakumar is the MD and CEO

 

Major Non – Promoter Holdings:

Sr No.	Major Non-Promoter	% Stake
1	DSP Blackrock Micro Cap Fund	2.61
2	Mousseganesh Limited	1.2
3	BRIC II Mauritius Trading	1.54
4	WF Asian Reconnaissance Fund Limited	4.53
5	Morgan Stanley Asia (Singapore) PTE.	1.74
6	Baring India Private Equity Fund III Listed Invest	9.43
7	Baring India Private Equity Fund II Limited	3.14
8	Merrill Lynch Capital Markets Espana	1.15
9	Ashish Dhawan	2.91

 

Financial Trends ~ Amt in Rs Crs

Particulars	FY 16		FY 15		FY 14		FY 13	FY 12	FY 11
	Consolidated	Standalone	Consolidated	Standalone	Consolidated	Standalone	Standalone	Standalone	Standalone
Equity Paid Up	168.24	168.24	168.24	168.24	168.24	168.24	168.24	168.23*	83.38
Networth	2758	2737	2633	2627	2324	2492	2443	2381	1924
Long Term Debt	1600	1115	1642	1550	1455	1455	1361	1072	4871
Total Sales	2360	2213	1986	1976	2100	2100	2217	2616	418
PAT	353	337	271	271	226	226	208	591	283
EPS (Rs)	4.20	4.01	3.23	3.22	2.69	2.69	2.48	7.03	3.36
Book Value (Rs)	33	33	31	31	28	30	29	28	23

 

• *Note that ~ In FY 12, Company had issued 1:1 bonus shares which resulted in the increase of shares by 416874188 number of equity shares. Also, the Company issued 7404760 shares to its employees under the ESOP 2009 scheme of the Company, resulting in the paid up share capital increasing to Rs 1682306272 in FY 12.
• The fall in profits in FY 13 was on account of under-recovery of interest amounting to Rs 284 Crs on a specific pool of its portfolio that was booked during the latter half of FY12. The Company also made additional provision amounting to Rs 51 Crs being the reversal of interest booked in FY12. The Company has faced a higher incidence of defaults in this pool after it began realigning its portfolio under the new loan to value (LTV) regime brought into effect in March 2012.