Key highlights from Manappuram Finance Ltd (MANAPPURAM) Q2 FY24 Earnings Concall
- Financial Performance
- Net profit increased 37% year-on-year to INR551 crore driven by profitability in gold loans and microfinance business.
- Gold loan AUM was INR20,809 crore, up 8.4% year-on-year.
- Maintained pricing discipline in competitive environment and improved profitability.
- Consolidated AUM at INR38,950 crore, up 27% year-on-year.
- Consolidated PAT at INR561 crore, up 37% year-on-year
- Gold loans comprise 53% of consolidated AUM.
- Gold Loan Business and Outlook
- Gold loan AUM at INR20,809 crore, up 8.4% year-on-year.
- Added 4.03 lakh new gold loan customers during the quarter. Adding around 5,000 new gold loan customers daily.
- Average loan-to-value ratio is 66%.
- 56% of gold loan book is online.
- South India contributes around 65% to gold loan portfolio
- Expect to maintain 7-8% gold loan growth momentum without gold price increases.
- Expects around 8% gold loan growth in Q3, higher than Q2 growth of 1%.
- Microfinance Business
- Asirvad Microfinance filed DRHP for IPO on October 5, 2022.
- Microfinance AUM at INR10,950 crore, up 43% year-on-year.
- Microfinance PAT at INR111 crore versus INR48 crore year-ago.
- Other Businesses
- Vehicle finance AUM at INR3,143 crore, up 66.6% year-on-year.
- Home loans AUM at INR1,305 crore, up 41% year-on-year.
- Loan to MSME and allied businesses AUM at INR2,639 crore.
- Loan Assignments
- Assigned loans worth around INR700 crore this quarter for MFI loans.
- Assignments not possible for gold loans, but doing for non-gold businesses.
- Opened lines of credit to diversify sourcing beyond deposits.
- Operating Expenses
- Employee expenses decreased due to lower incentives tied to growth and asset quality.
- Administrative expenses increased due to more communication and outsourcing costs.
- Gold Loan Competition
- Maintaining pricing discipline around 22% despite competition.
- As banks’ overall credit growth increases, preference for small ticket gold loans may decrease.
- Expect competition to taper given rising funding costs.
- Gold Loan Portfolio
- 15% of book less than 1 month old.
- Average LTV 66%.
- Auctions were INR15 crore in 2Q.
- Option surplus reduced from INR35 crore last quarter to INR30 crore now.
- Delinquencies higher than MFI loans as grace period is provided to borrowers.
- Underlying gold collateral ensures no loss on recovery.
- Can sell gold before NPA classification if needed based on contract.
- Asirvad Microfinance Growth
- Current capital position sufficient to support growth this year.
- Fundraising through IPO for growth capital needs in future.
- No expected slowdown in growth momentum.
- Funding and Liquidity
- Apprehension from case now resolved with final order.
- Have around INR4,800 crore in liquidity now.
- Seeing adequate liquidity and some pricing reductions.
- Fee and Commission Income
- Stood at INR31 crore in Q2 vs negligible in previous quarters, primarily from referral fees on selling products like appliances to borrowers.
- Q2 income higher due to pent up demand in Q1 when disbursements were slow.
- Expect run-rate to continue but not as high as Q2 due to one-time benefit.
- Business Outlook
- Expect similar growth trends in Q3 as Q2 across gold and non-gold.
- Targeting around 10-15% growth for non-gold lending business.
- Growth dependent on region specific cycles and market conditions.