Manappuram Finance Limited

Manappuram Finance Limited Fundamental Analysis

Company Profile: Manappuram Finance Limited (MAFIL) is a Non-Banking Financial Company (NBFC) based in Kerala, India. MAFIL is a Mid Cap company with market capitalization of 13,870.56 crores. The Managing Director of MAFIL is V.P. Nandakumar, who hails from Thrissur, Kerala. Manappuram Finance opened its first branch in 1949, which has now grown to 4300+ branches all over India.

Business Areas:

  1. Gold loans (67.4%)
  2. Microfinance (20.8%)
  3. Housing finance (2.5%)
  4. Vehicle and equipment finance (3.5%)
  5. Money transfer
  6. Insurance broking

Revenue Segments:

  1. Interest Income (98.59%)
  2. Fees and Commission Income (1.34%)
  3. Other Income (0.06%)

Net Income:

  • FY2015:  271.31 crores
  • FY2016:  353.36 crores
  • FY2017:  755.84 crores
  • FY2018:  677.19 crores
  • FY2019:  922.41 crores

Other Financials:

  1. Total Promoter shareholding: 35.04%
  2. Pledged Promoter Holdings: 0.77%
  3. Mutual Fund Holdings: 4.34%
  4. Domestic Institutional Holdings: 5.75%
  5. Foreign Institutional Holdings: 44.29%
  6. Other Parties: 14.91%

Key Operational Metrics:

  1. Number of Branches: 4351
  2. Employee Strength: 25,610
  3. Number of Customers: 4.3 million
  4. Gold Holding: 67.5 tonnes

Advantages:

  1. Company’s main source of income is interest from gold loans, which is one of the oldest forms of secured lending.
  2. The company mainly deals with short term borrowing and lending rather than long-term loans.
  3. Company’s diversification efforts to non-gold businesses are now contributing significantly to their growth and profitability.
  4. The share of Non-Banking Financial Companies in total credit of India is ever increasing.
  5. The company has strong capitalization and capital adequacy ratio.
  6. Well-known brand in South India, with recent pan-India expansion efforts.
  7. Large customer base throughout India.
  8. Excellent management team.
  9. The company’s stock has been generating better returns on equity.
  10. The company also offers good dividend income for investors.

Risks:

  1. Increasing non-performing assets from non-gold based loans.
  2. Higher fund raising costs can affect company’s margins.
  3. Reduction in loan-to-value (LTV) ratio by Reserve Bank of India can affect company’s profitability.
  4. Natural calamities can affect the repayment capacity of the company’s borrowers.

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