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Manappuram General Finance is the second-largest listed gold loan company with a
~7% share of the organized market. Established in 1992, the company provides shortterm
retail loans (up to one-year duration) to retail customers against used household
gold jewellery. The company has branch strength of 2,280 and AUM (as of 1QFY12)
stands at Rs90.3B. MGFL has registered very high growth over the last few years
aided by both increased branch network and buoyancy in gold prices.
PSL for gold loan companies may come back in a year. According to
management, costs have increased by 150-200bp after this benefit was withdrawn
but no risk to business.
Gold prices need to correct at least 40% in a short period of time for business
to get affected: Management indicated that average loan ticket size of 40-45gms
hasn’t changed over the last 15 years. Gold prices and increasing number of
customers are the key variables driving growth.
Company is targeting a loan book of Rs 16B in FY13 (Rs 9B currently).
Leverage is 5x currently and management does not see a need for any capitalraising
in the near term.
Loan growth guidance and branch opening targets may be revised upwards as
per the management. Management guided to a sustainable RoA at 4.5% levels.
Management does not see regulatory action as a big threat to their model. In
fact, quite the contrary, it believes that the regulators would look to encourage this
as they help in enabling last mile financing.
Consensus valuation: On consensus estimates, the stock is currently trading at
FY2/FY13E P/B of 2.1x/1.7x with ROEs of 22-25% over the next two years.
Concerns about increasing cost of funding, stringent regulatory environment and
gold price correction (risk of higher NPLs) continue to weigh on near-term stock
performance
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Manappuram General Finance is the second-largest listed gold loan company with a
~7% share of the organized market. Established in 1992, the company provides shortterm
retail loans (up to one-year duration) to retail customers against used household
gold jewellery. The company has branch strength of 2,280 and AUM (as of 1QFY12)
stands at Rs90.3B. MGFL has registered very high growth over the last few years
aided by both increased branch network and buoyancy in gold prices.
PSL for gold loan companies may come back in a year. According to
management, costs have increased by 150-200bp after this benefit was withdrawn
but no risk to business.
Gold prices need to correct at least 40% in a short period of time for business
to get affected: Management indicated that average loan ticket size of 40-45gms
hasn’t changed over the last 15 years. Gold prices and increasing number of
customers are the key variables driving growth.
Company is targeting a loan book of Rs 16B in FY13 (Rs 9B currently).
Leverage is 5x currently and management does not see a need for any capitalraising
in the near term.
Loan growth guidance and branch opening targets may be revised upwards as
per the management. Management guided to a sustainable RoA at 4.5% levels.
Management does not see regulatory action as a big threat to their model. In
fact, quite the contrary, it believes that the regulators would look to encourage this
as they help in enabling last mile financing.
Consensus valuation: On consensus estimates, the stock is currently trading at
FY2/FY13E P/B of 2.1x/1.7x with ROEs of 22-25% over the next two years.
Concerns about increasing cost of funding, stringent regulatory environment and
gold price correction (risk of higher NPLs) continue to weigh on near-term stock
performance
Manappuram Finance is the biggest gold loan company in India. It offers gold loan to the people at the cheapest interest rates. The person can easily avail huge cash by placing gold property as collateral. The Manappuram Loan Against Gold is the best way to make money in times of need.
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