Manappuram Finance Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Manappuram Finance Ltd (MANAPPURAM) Q4 FY22 Earnings Concall

Q&A Highlights:

• Dhaval Gada from DSP asked about the pricing pressure in the gold business and the outlook on lending rates in gold loan business. V.P. Nandakumar MD said that the company will settle where it believes to be prudent, which is around 21%.

• Dhaval Gada from DSP also asked about the tenure mix in gold loan, how much is below 3 months and above 3 months. V.P. Nandakumar MD replied that two-third is three months and 30% is six months and below 5% is in one year where the LTV granted is 50%.

• Dhaval Gada from DSP asked about the fair value gain of INR63 crore in 4Q22 and if it’s on account of assignment in the MFI book or any other portfolio. Bindu A.L CFO answered that in MFI MANAPPURAM did assignment transaction and that is the reason for the one-time income during this quarter.

• Dhaval Gada from DSP also asked if the company has seen further reduction of gold AUM in April because of maintaining the yield. V.P. Nandakumar MD answered that during April it was flat. But in May MANAPPURAM is seeing slight growth and by June things are expected to further improve. In FY23 the company is targeting a minimum growth of around 10%.

• Piran Engineer from CLSA asked about the proportion of restructured loans in Asirvad. Yogesh Udhoji CFO Asirvad answered that on the restructuring, MANAPPURAM has currently 12-12.5% book which is still remaining at around INR790 crores. For Asirvad, April collection was never considered. So MANAPPURAM has not provided anything extra in NPL.

• Piran Engineer from CLSA also enquired how much of yield hike is the company taking because of the removal of the spread cap. V.P. Nandakumar MD said that with the removal of NIM cap, the company has factored few things in pricing. One, factored around 3% as credit costs. So that is factored in the new pricing.

• Shubhranshu Mishra of UBS asked if 19-20% is the normalized yield and if the company is looking at ROAs of around 5.5%, 6% as normalized level going forward. V.P. Nandakumar MD said the company is currently settling down at 21% yield in gold loan. MANAPPURAM added that it’s targeting a yield not less than 5% ROA.

• Shweta Daptardar with Elara Capital asked that the OGL loans ticket size has gone up and QonQ the increase is slightly meaningful. V.P. Nandakumar MD said that OGL was high during the lockdown period and many of other conventional loans also have been shifted to OGL as the offices were closed. Now when all the offices are open and transportation restored, OGL is not showing growth in recent days.

• Dhaval Gada from DSP enquired about the advertising and promotion expense for 4Q22 and FY22. Bindu A.L CFO answered that in 3Q the company was aggressive in advertisement spend because it was not spending much in the past. For 4Q22 the expense was INR12 crore and for FY22 INR89 crores.

• Dhaval Gada from DSP asked about the gold loan and the consolidated AUM growth expectation for FY23. V.P. Nandakumar MD said that the company expects gold loan growth to be around 10% and overall consolidated AUM to grow by 15%.