Manappuram Finance's gold portfolio de-grew by 6% QoQ due to higher auctions (Rs.4 billion) as well as decline in gold prices (down 12% QoQ). This resulted into slowdown in AUM growth to 8% YoY vs 15% YoY (Q3FY21).
However, non-gold portfolio grew by 10% QoQ led by 12% QoQ growth in MFI (22% share of AUM). MFI reported stable asset quality as GNPA stood at 2.5% vs 2.6% QoQ; however, PAT declined by 82% QoQ due to higher provisions (up 96% QoQ).
Commenting on the result review, IDBI Capital said, "We need to watch out for second wave impact on MFI portfolio. NII grew by 18% YoY led by improvement in NIMs; PPoP grew by 11% YoY led by decline in other income (down 62% YoY). PAT grew by 24% YoY led by lower provisions (down 13% YoY).
We believe covid-19 impact on non-gold portfolio was the key reason for under performance against Muthoot Finance; thus with clarity on second wave impact on the same should result decline in valuation difference. We largely retained estimates and re-iterate 'BUY' with a TP of Rs.220, valuing it at 2.0x P/ABV FY23 vs 3X P/ABV FY23 for Muthoot Finance (Gold finance market leader)."
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