Manappuram Finance Q3 Falls Short of Expectations; Jefferies Maintains ‘Hold’ on Margin and Asset Quality Concerns

Manappuram Finance reported a 16% YoY decline in standalone net profit to ₹381.15 crore for Q3 FY26, weighed down by rising finance costs and sharply higher loan loss provisions. Consolidated PAT dipped further to ₹238.5 crore (from ₹278.46 crore), with consolidated revenue falling to ₹2,353 crore amid an 19% surge in total expenses. While gold loans showed strength—driven by rising gold prices and a 58% YoY increase in AUM—the broader performance was overshadowed by persistent challenges. Net interest margin (NIM) contracted 167 bps QoQ to 10.6%, as the company lowered lending yields to align with peers. Cost of funds eased only slightly, offering little relief. Jefferies maintained a ‘Hold’ rating with a target price of ₹285 (implying ~2% downside), citing lower-than-expected profits (vs ₹330 crore estimate), margin pressure, and elevated credit costs. The brokerage noted that stress in non-gold segments—microfinance, vehicle, and small business loans—led to higher provisioning, with gross NPAs rising sequentially across these portfolios. Although management is focusing on strengthening branch infrastructure for gold loans and cleaning up the non-gold book, Jefferies sees limited near-term growth visibility outside gold lending, with meaningful recovery in other segments unlikely before Q1 FY27. With earnings under pressure and margins expected to stabilize at lower levels, Jefferies views the stock as fairly valued, offering limited upside despite favorable gold market conditions. While gold-backed collateral remains robust, operational headwinds continue to cloud investor sentiment.