Manappuram Finance’s shares fell 3% after weak Q1FY26 results. Net profit dropped 75% year-on-year as revenue declined, but management expects profitability to return by Q4FY26.
Shares of Manappuram Finance Ltd. (India) dropped 3 percent to Rs 251 on August 11 after the company reported weak financial results for the June quarter (Q1FY26). Despite a challenging quarter, management expressed confidence that the worst phase has passed and expects profitability to return by the fourth quarter of FY26.
Manappuram Finance posted a net profit of Rs 138 crore in Q1FY26, down 75 percent year-on-year from Rs 555 crore in the same period last year. Revenue from operations declined 9 percent to Rs 2,262 crore. The gold loan segment saw revenue rise 10 percent year-on-year to Rs 1,904 crore, supported by higher gold prices, while the microfinance segment experienced a sharp 53 percent drop in revenue to Rs 361 crore.
Jefferies has maintained a “hold” rating on Manappuram Finance but raised its target price to Rs 275 per share. The brokerage noted that while the weaker net interest income (NII) was offset by lower provisions in the microfinance segment, challenges such as lower net interest margins (NIMs), the unwinding of non-gold loans, and elevated microfinance provisions continue to weigh on earnings. It emphasized that clearer indications of the turnaround under the new CEO will be critical for a positive re-rating.
CLSA retained an “outperform” rating with a target price of Rs 260. The firm highlighted that the pre-provision operating profit (PPoP) and net profit for Q1FY26 missed estimates by 9 percent due to sharper-than-expected declines in yields and spreads. Management has cut lending rates on high-ticket loans and plans further reductions to around 18 percent over the next four to six quarters. Loan growth of 13 percent quarter-on-quarter was primarily driven by higher ticket sizes, while the Asirvad microfinance business’s loan book declined 23 percent sequentially.
Overall, Manappuram Finance faces pressure on earnings amid a challenging microfinance environment and competitive lending rates. However, the company’s strong gold loan portfolio and management’s guidance on improved profitability by Q4FY26 provide cautious optimism for investors.
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