Manappuram Finance Limited

Management has initiated a major strategic shift to increase the gold loan share of the consolidated AUM from the current 65% to 75%. This move is intended to de-risk the balance sheet following significant losses in the unsecured microfinance segment. The company plans to leverage its 1,100 MFI branches to offer gold loans through co-lending models, aiming for a total of 5,000+ gold-offering branches by year-end.

Gold loan yields dropped from 22.2% in Q4 FY25 to 20.7% in Q1 FY26. Management explicitly stated this is a calibrated strategy to match the 18-19% yields offered by top-tier NBFC competitors. They expect yields to gravitate toward 18% over the next 4-6 quarters, betting that the resulting volume growth and lower borrowing costs (down 2bps this quarter) will protect absolute budgeted income.

Asirvad Microfinance remains the primary source of consolidated stress, posting a ₹267 crore loss this quarter. However, this is a significant improvement from the ₹624 crore loss in the previous quarter. Management expects credit costs to drop by another 30% in coming quarters and plans to cap the MFI segment at 10% of the total consolidated book, down from its historical highs.

The vehicle finance segment is facing headwinds, with AUM declining 5.9% QoQ to ₹4,492 crores and GNPA rising to 9.2%. Management has responded by exiting risky segments like farm equipment and 2-wheelers, shifting focus toward larger ticket sizes in used commercial vehicles and cars (targeting ₹10 lakh+ tickets). MSME lending is also being refocused toward secured loans to improve asset quality.

Regulatory changes regarding cash transfers for gold loans have negatively impacted the small-ticket segment (<₹1 lakh), leading to a migration of these customers to unorganized pawnbrokers. Consequently, growth is currently being driven by higher-ticket customers and gold price appreciation, with tonnage growth remaining flat at 1% despite a 12% increase in AUM value.