Manappuram Finance posted a surprise 2% increase in consolidated net profit for the second quarter, reporting ₹571 crore for the three months ending September 30. This exceeded analysts’ expectations of ₹531 crore, marking a substantial performance boost driven by its gold loan segment, which offset higher provisions.
The robust profit growth came as domestic gold prices reached new heights, bolstering the value of collateral for gold loan financiers and fueling demand for loans against these higher-valued assets. Revenue from Manappuram’s gold loan portfolio rose 21% year-over-year to ₹1,856 crore, making up 70% of the company’s total revenue.
The company also saw significant growth in its microfinance portfolio, with revenue increasing 22.6% to ₹781 crore, contributing 29.6% of total revenue. Overall, Manappuram Finance’s assets under management expanded by 17.4% to ₹45,700 crore, and net interest income similarly surged by 17.4%.
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However, the company faced a notable rise in provisions, which more than doubled to ₹260 crore, mainly due to impairments in its Asirvad Micro Finance unit, which increased by 121.8%. This uptick in provisions follows concerns in the microfinance sector, flagged by other lenders such as IndusInd Bank and Kotak Mahindra Bank, leading to an impact on their own earnings.
In October, the Reserve Bank of India restricted Asirvad Micro Finance from disbursing new loans, citing “usurious” pricing practices. Despite this, shares of Manappuram Finance closed 4% higher ahead of its earnings announcement, reflecting investor confidence in the company’s resilience and strong performance in the gold loan sector.
