Mid-Cap NBFC Stock Dives 11% on Poor Q4 Profit Show, Yet CLSA Maintains Buy

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Mid-Cap NBFC Stock Dives 11% on Poor Q4 Profit Show, Yet CLSA Maintains Buy
Credit: © Reuters.

By Malvika Gurung

Investing.com -- Shares of the leading NBFC Manappuram Finance (NS: MNFL ) dived 10.86% to Rs 93.2 apiece at 10:37 am on Thursday, after reporting poor profit figures in the March ending quarter.

Its net profit declined more than 44% YoY to Rs 261 crore in the March quarter and fell 23% YoY to Rs 1,320.2 crore in the financial year 2021-22.

The company’s profit after tax was impacted temporarily due to the shifting of high yield to lower-yielding gold loans. It has, however, reduced the operating expenses in the quarter under focus and intends to maintain it, stated the NBFC.

"We are focusing more on collection efficiency and quality growth in MFI books and building up a gold loan portfolio," it added.

Its NII also declined 10.2% YoY to Rs 986.5 in Q4, and income from operations reduced 8.7% YoY to Rs 1,481.4 crore in the period.

Despite its performance in Q4, global brokerage Nomura has maintained a Buy rating on the NBFC stock, seeing a slightly better outlook, and its microfinance performance being divergent compared to peers.

The brokerage expects a 14-15% return on equity for the standalone entity and has set a target price of Rs 120/share on the stock, an upside of 28.75% compared to the current price.

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