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Manappuram Finance shares hit a new record high of ₹323.80 on Wednesday, gaining 3% during intraday trading on the BSE. This rise occurred even as the broader market, including the BSE Sensex, saw a slight decline. The company's stock has shown significant strength over the past month, surging 20% while the Sensex dropped 4.4%.
Analyst Optimism Fuels Stock Gains
Brokerage firms are expressing increased confidence in Manappuram Finance. Axis Securities upgraded its rating to 'Buy' from 'Hold', setting a new target price of ₹340, up from ₹295. The firm cited improving earnings visibility, driven by its strong gold loan business and signs of stability in its non-gold loan portfolios. Axis Securities forecasts healthy growth in gold assets under management and expects a return on assets (RoA) between 2.8% and 3% for FY27-28.
ICICI Securities also maintains an 'Add' rating with a target price of ₹335. Analysts there see potential in the company's adjusted strategy, which involves reducing its microfinance institution (MFI) exposure, strengthening asset quality management, and focusing on the gold business for growth. While acknowledging previous fluctuations in yields and MFI mix, ICICI Securities believes Manappuram's current stock valuation is appealing and that the most challenging period is likely over. They highlighted an 18.8% earnings compound annual growth rate (CAGR) from FY19-24, with an average RoA of 5% and return on equity (RoE) of 21.8% during that period.
Trading Volume and Key Metrics
Around 3.73 million Manappuram Finance shares traded across the NSE and BSE by midday. The company's strong stock performance stands in contrast to the general market slowdown, reflecting growing investor trust in its financial stability and future outlook. Management's focus on asset quality in its non-gold segments is starting to yield positive results, with expectations for gradual acceleration in growth from these areas.