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Manappuram Finance: Buy; PT Rs155 (Analyst –
Ajitesh Nair)
Growth: No constraints on either demand side or ability (CAR at 30%) can
easily double the loan book. Question is regulatory changes. How much does
RBI allows to grow is the question. Worst case the company is looking at a
40% growth in loan book this year.
NIMs: Cost of funds has witnessed an increase of 150 bps over last three
months primarily due to removal of PSL status (also due to tight liquidity in
March). Incrementally MGFL is borrowing at 12.5% while lending at 25%.
On an average cost of borrowings are at 11.5%, lending yields at 24%,
maintaining spreads between 12-13%
Opex to assets to come down to 6% from 8% primarily due to lower
advertising spend of Rs750mn compared to Rs1bn in FY11. Operational
efficiency will also help as 1000 branches are less than 12 months old and
not on full productivity levels.
Regulatory environment is uncertain and its in RBI’s hand what changes do
they recommend. No expectations as such as PSL status has already been
removed, minimum CAR levels has already been increased to 15%, RBI
inspects the NBFCs once a year as in the case of banks.
Happy in case banks enter the space as market will grow strongly due to
wider acceptance and more awareness. Customer segment for banks and
NBFCs are different as banks focus of >1 lakh ticket size. NBFCs have
advantage in terms of cost and faster turnaround.
Growth in North India is picking up. Currently non south contributes 13% of
book, the proportion is expected to grow to 20% in FY12.
Removal of PSL has not impacted availability of funds but has increased the
cost of it. ICICI Bank, Yes Bank, most PSU banks are the preferred bankers.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Manappuram Finance: Buy; PT Rs155 (Analyst –
Ajitesh Nair)
Growth: No constraints on either demand side or ability (CAR at 30%) can
easily double the loan book. Question is regulatory changes. How much does
RBI allows to grow is the question. Worst case the company is looking at a
40% growth in loan book this year.
NIMs: Cost of funds has witnessed an increase of 150 bps over last three
months primarily due to removal of PSL status (also due to tight liquidity in
March). Incrementally MGFL is borrowing at 12.5% while lending at 25%.
On an average cost of borrowings are at 11.5%, lending yields at 24%,
maintaining spreads between 12-13%
Opex to assets to come down to 6% from 8% primarily due to lower
advertising spend of Rs750mn compared to Rs1bn in FY11. Operational
efficiency will also help as 1000 branches are less than 12 months old and
not on full productivity levels.
Regulatory environment is uncertain and its in RBI’s hand what changes do
they recommend. No expectations as such as PSL status has already been
removed, minimum CAR levels has already been increased to 15%, RBI
inspects the NBFCs once a year as in the case of banks.
Happy in case banks enter the space as market will grow strongly due to
wider acceptance and more awareness. Customer segment for banks and
NBFCs are different as banks focus of >1 lakh ticket size. NBFCs have
advantage in terms of cost and faster turnaround.
Growth in North India is picking up. Currently non south contributes 13% of
book, the proportion is expected to grow to 20% in FY12.
Removal of PSL has not impacted availability of funds but has increased the
cost of it. ICICI Bank, Yes Bank, most PSU banks are the preferred bankers.
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