Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Manappuram Finance Ltd (BOM:531213, Financial) reported a net profit of INR557 crores, an improvement of 11.7% year on year.
- The standalone AUM grew by 20.6% year on year to INR31,035 crores.
- Gold AUM reached INR23,647 crores, an improvement of 14.8% over the same quarter last year.
- The company added 4.21 lakh new customers during the quarter, increasing the number of outstanding customers to 24.5 lakh.
- The home loan business saw a 32% increase in AUM year on year, reaching INR1,587 crores.
Negative Points
- Standalone GNPA increased slightly to 1.96% from 1.93% in the previous quarter.
- Borrowing costs have risen by 18 basis points, partly due to raising USD300 million under regress in May 2024.
- The microfinance sector is facing collection challenges due to climatic conditions and rumors of loan waivers.
- Vehicle finance GNPA stands at 3.6%, indicating some stress in this segment.
- The company is experiencing increased stress in the MSME segment, with GNPA levels rising.
Q & A Highlights
Q: After a long time, we are seeing decent customer addition in the gold book. What has changed? Have you benefited from the ban on a competitor? Also, what are you seeing on the ground in the MFI business?
A: The demand from our target audience has increased post-COVID, leading to more customer additions. The ban on a competitor has not materially affected us. In the MFI sector, challenges like elections, rumors of loan waivers, and climatic conditions have impacted collections, but we are managing these issues.
Q: What is your expectation for customer growth in the gold loan segment?
A: We expect to grow around 12-15% this year, with customer growth also around 15%. The demand is slowly returning to pre-COVID levels.
Q: Can you explain the INR20 crores exceptional item in the standalone financials?
A: This is due to unauthorized access by a subsidiary employee. The loss was already factored in over the years, and now it is coming as income. In consolidated numbers, it is adjusted, with only a tax impact of INR4 crores.
Q: Which geographies are stressed in the MFI business?
A: States like Punjab, Gujarat, Rajasthan, and Madhya Pradesh are facing challenges. However, not all branches in these states are affected. The issues are mainly in specific pockets.
Q: What cost rationalization measures have you taken for the gold loan business?
A: We have not undertaken cost rationalization. The fixed costs of gold loan branches mean that additional business helps reduce the OpEx to AUM ratio.
Q: What is the impact of a competitor restarting operations on your business?
A: When competitors return, they will follow regulatory guidelines, ensuring a level playing field. The demand for gold loans is driven by our target audience's needs, not by competitors' actions.
Q: What is your guidance for gold loan growth and overall consolidated AUM growth for FY25?
A: We expect gold loan growth to be around 15% for FY25. The overall consolidated AUM is also expected to grow similarly, with non-gold segments like vehicle finance and MSME contributing.
Q: What are the reasons for the increase in NPAs in non-gold segments like vehicle finance and MSME?
A: Climatic conditions like heat waves have affected productivity, leading to delays in payments. However, these are genuine customers who will gradually catch up on their payments.
Q: What is your target ROA for the full year?
A: We are targeting an ROA of 4.5% and aim to improve it further over the next few quarters.
Q: What is the impact of provisioning in the MFI segment, and do you expect more stress in the coming quarters?
A: The MFI sector faces challenges, but we are managing them well. We have constraints in disclosing detailed numbers due to the DRHP stage. However, we expect the situation to improve gradually.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
