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Manappuram Finance shares fell 4% after reporting a sharp rise in net profit, but rising delinquency and competitive pressures tempered investor confidence.

Manappuram Finance Shares Drop Amid Rising Delinquency Despite Strong Earnings

Shares of Manappuram Finance dipped 4% intraday on Friday following its Q2 FY27 earnings report, despite brokerages revising their estimates upward due to strong performance. The company reported a 222.90% year-on-year (YoY) surge in consolidated net profit to ₹701 crore and revenue growth of 46.2% YoY to ₹3,356 crore.

The stock's decline reflects investor caution over rising delinquency risks despite robust earnings growth. Manappuram Finance’s assets under management (AUM) reached ₹73,303 crore as of September 30, 2026—a 60.1% YoY increase—driven largely by a 92.5% rise in gold loan AUM to ₹60,640 crore.

However, rising delinquency rates for shorter-tenure schemes and competitive pressures have dampened sentiment. Standalone delinquency in GS-3 increased sequentially to 1.8%, while NS-3 rose to 1.2%. Gold GS-2 delinquency jumped sharply to ~5% from 0.5% a year earlier, raising concerns about credit risk management.

Brokers like Equirus raised FY27–FY28 earnings per share (EPS) estimates by 3–4%, citing better net interest margins and lower operating costs. The brokerage also set a target price of ₹400 based on 1.6x December 2028 estimated book value.

Despite the challenges, Manappuram Finance declared an interim dividend of ₹1 per equity share for FY27, signaling confidence in its financial position.

Equirus Securities maintains a 'Buy' rating with a target price of ₹401 by September 2027. Jefferies projects a 17% compound annual growth rate (CAGR) in AUM for FY26–FY28 from customer and branch additions. Brokers expect profit to rise threefold on a weak base, with return on equity (ROE) improving to 14% over the period.

Manappuram Finance’s shares fell despite strong Q2 results due to rising delinquency risks. Brokerages remain optimistic about long-term growth potential but caution that credit risk management will be critical for sustained success.

Topics: Finance Markets India Manappuram Finance Gold Loans Financial Performance Brokerage Analysis

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Source: Business Standard