Manappuram Finance Ltd Q2FY20 Result Update – Strong overall results in terms of AUM growth, operating efficiencies and PAT
- Manappuram reported strong set of result with AUM growth at 32% YoY, one of the highest in last 10 quarters to INR 22,677cr. The company reported significant growth in its overall book with gold loan growth at 20% YoY to INR 15,168cr while other loans increasing at 63% YoY to INR 7,509cr.
- The gold loan growth was supported by 7% YoY growth in tonnage and high gold prices. Management expects 10-12% YoY tonnage growth for FY20.
- Microfinance / Housing Finance / Vehicle / Other loans saw healthy growth at 73% / 27% / 61% / 49% YoY respectively. The overall non gold loans now contributes 33% of the total loans.
- Net revenue increased by 28% YoY to INR 909cr on back of more than 6 times growth in other income. Other income includes one-time tax refund to the tune of INR 50cr as a consequence other income growth was high.
- Cost to Income (C/I) ratio improved significantly by 825bps to 40.2% resulting in 48% YoY growth in operating profits. Operating profits during the quarter came in at INR 544cr.
- Credit cost during the quarter improved by 21bps QoQ to 0.59%, however it increased 17bps YoY resulting in 49% YoY growth in PBT to 544cr.
- Company paid lower tax this quarter at 21% as compared to 36% in Q2FY19 as a consequence of this PAT registered growth of 82% YoY to INR 404cr.
- Manappuram reported marginal improvement in asset quality with GNPA / NNPA at 0.6% / 0.5% decreased by 10bps each QoQ respectively.
- Manappuram’s cost of funds (calc.) increased by 29bps YoY while Yield on advances (calc.) decreased by 128bps YoY resulting in overall NIM compression of 159bps YoY to 16.4%.
- Compression in NIM led to lower growth in NII at 18% YoY to INR 820cr
· We believe, Manappuram have reported strong set of numbers with respect to healthy overall AUM growth, improvement in C/I ratio, improvement in credit cost and asset quality on QoQ basis.
· Overall other loans now contribute 33% of the total AUM and management reiterated that this segment to go up-to 50% of the total loans.
- At CMP of INR 168, the stock is trading at 2.4x FY21ABV
|INR cr||Q2FY20||Q2FY19||% change||Q1FY20||% change|
|Net interest income||820||697||17.6%||764||7.3%|
|Adj. EPS (INR)||9.7||5.3||81.8%||6.5||49.7%|
|Ratios (Calculated)||Q2FY20||Q2FY19||% change||Q1FY20||% change|
|C/I Ratio||40.2||48.4||-825 bps||44.0||-377 bps|
|Yield on advances||25.0||26.3||-128 bps||24.9||11 bps|
|Cost of funds||10.4||10.1||29 bps||10.3||12 bps|
|Spread||14.6||16.2||-157 bps||14.6||-1 bps|
|NIM||16.4||18.0||-159 bps||16.6||-16 bps|
|Balance Sheet||Q2FY20||Q2FY19||% change||Q1FY20||% change|
|Asset Quality||Q2FY20||Q2FY19||% change||Q1FY20||% change|
|GNPA (%)||0.6||0.7||-10 bps||0.7||-10 bps|
|NNPA (%)||0.3||0.2||10 bps||0.4||-10 bps|
|Provision Coverage Ratio||50.0||71.4||-2,143 bps||42.9||714 bps|
|AUM Break up (INR Crs)||Q2FY20||Q2FY19||% change||Q1FY20||% change|