Manappuram Finance Limited — Q2 FY26 earnings call

Call held 30 Oct 2025

Management summary

Manappuram Finance is undergoing a strategic transition, prioritizing gold loan growth to offset significant headwinds in its microfinance (Asirvad) and vehicle finance segments. The company is aggressively cutting gold loan rates to align with top-tier NBFC peers, targeting high-ticket customers to drive volume. While consolidated profits improved sequentially as MFI losses narrowed, asset quality stress in non-gold segments remains a key monitorable.

Highlights

  • Consolidated Net Profit recovered to ₹217 crore from ₹132 crore in Q1 FY26

  • Consolidated Gold Loan AUM reached ₹31,505 crore, growing 29.3% YoY

  • Gold loan share in consolidated AUM increased significantly to 69% from 53% YoY

  • Standalone PAT reported at ₹376 crore, impacted by vehicle finance provisions

  • Average Gold Loan LTV maintained at 56% with portfolio yield at 19.7%

  • Asirvad Microfinance AUM stood at ₹6,165 crore, a 56% YoY decline in the MFI portfolio

  • Gold auction figures for the quarter were ₹229 crores

  • Board declared an interim dividend of ₹0.50 per share

Concerns

  • Yield Compression in Gold Loans

  • Asset Quality in Vehicle Finance

  • Microfinance Sector Liquidity and Stress

Key financials

  1. Consolidated Net Profit ₹217 Cr +64.4%QoQ
  2. Consolidated AUM ₹45,789.42 Cr +3.4%QoQ
  3. Gold Loan AUM ₹31,505 Cr +29.3%YoY
  4. Standalone PAT ₹376 Cr
  5. GNPA 3% +0.34%QoQ
  6. CRAR 28%

What they filed

Q1 FY27: revenue up 45.9%, net profit up 40.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,748 1,799 1,739 1,743 1,820 +4%1,918 +7%2,158 +24%2,543 +46%
Net profit475 453 414 392 376 −21%381 −16%376 −9%552 +41%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Gold Loans
    ₹31,505 Cr AUM19.7% Yield56% LTV
  • Asirvad Microfinance
    ₹6,165 Cr Total AUM-56% MFI Portfolio Growth
  • Vehicle and Equipment Finance
    5% GNPA24% Provision Coverage
  • Home Finance
    ₹1,900 Cr AUM12.3% Growth

Guidance & targets

Volume

  • Gold Loan CAGR Volume · FY26 · Medium confidence 20%-25%
    we hope that we are targeting a CAGR of 20%-25%. Even if the gold price pulls down in the next quarter.

    — V.P. Nandakumar, CMD

Margin

  • Gold Loan Yield Margin · FY26 · High confidence 18.5%

    Previously 19.7% → 18.5%

    We expect that to be somewhere around 18.5 similar to the industry.

    — V.P. Nandakumar, CMD

Profitability

  • Asirvad MFI Financials Profitability · Q4 FY26 · Medium confidence Green (Profitable)

    From Loss-making today

    Q4 at least, I think we should see the financials as green.

    — Bindu A.L., CFO

Other

  • Bain Transaction Approval Other · Q3 FY26 · High confidence 1 month
    So we hope that will be through in another one month.

    — V.P. Nandakumar, CMD

Risks & concerns

  • Yield Compression in Gold Loans

    high

    Yields have dropped from ~22% to 19.7% and are guided to fall further to 18.5% to stay competitive.

    Both acknowledged

  • Asset Quality in Vehicle Finance

    high

    GNPA in vehicle finance rose to 5%, leading to increased provisions and a sequential drop in standalone profit.

    Both acknowledged

  • Microfinance Sector Liquidity and Stress

    high

    Analysts raised concerns about industry-wide liquidity crunch in MFI; management claims Asirvad is well-supported by the parent.

    Analyst downplayed

Areas of evasion (1)

  • Specific timeline for vehicle finance turnaround was vague ('a few quarters').

Q&A highlights

2 direct
Strategy of Lowering Gold Loan Rates Direct
So policy is to align the interest rate with the top players in the NBFC sector. So this ensures sustenance of the business.

Confirms a structural shift in Manappuram's gold loan pricing strategy, moving away from high-yield niche to direct competition with market leaders.

Asked by Rajiv Mehta, YES Securities

Shift to Higher Ticket Sizes vs. Yield Hit Partial
Larger ticket size are increasing with the reduction in interest rate... even at a lower price, we hope that we are targeting a CAGR of 20%-25%.

Analysts are concerned about the trade-off between volume and yield, especially as RBI norms for smaller tickets are more supportive of high LTVs.

Asked by Shweta Daptardar

Asirvad MFI Losses and Future Plans Direct
No, we don't have any plan to sell off Asirvad. So we are very confident of running the business with good asset quality within the MFI as well as Gold loan.

Management explicitly denied rumors of exiting the MFI business despite recent heavy losses and regulatory challenges.

Asked by Subranshu Mishra, PhillipCapital

2 min read 5 chapters

Detailed narrative

Gold Loan Strategy: Volume over Yield

Manappuram is aggressively pivoting its gold loan business to compete with top-tier NBFCs by lowering interest rates. Portfolio yields have already compressed to 19.7% from historical highs and are expected to settle at 18.5%. Management believes this will attract higher ticket size customers and drive a 20-25% CAGR in AUM, offsetting the margin hit through operational efficiencies and lower cost of funds. Gold loan AUM per branch has already seen an increase, supported by a strong collateral base.

Asirvad Microfinance: Stabilization Mode

The microfinance subsidiary, Asirvad, is emerging from a period of intense stress following a 'cease and desist' order and high credit costs. The MFI portfolio has shrunk by 56% YoY to ₹6,165 crore as the company focused on collections over new disbursements. Management expects the segment to return to profitability ('green') by Q4 FY26, supported by a ₹500 crore capital infusion from the parent and a shift toward co-lending models to manage risk.

Vehicle Finance Stress and Re-strategizing

The vehicle finance segment faced significant headwinds this quarter, with GNPA rising to 5%. This was attributed to stress in farm equipment and two-wheeler segments across specific geographies. In response, Manappuram has increased provision coverage to 24% and is shifting its focus toward higher ticket sizes (₹8-15 lakhs) where collateral is easier to liquidate via SARFAESI. Disbursements were intentionally slowed to prioritize collection and underwriting tightening.

Management Transition and Future Roadmap

New CEO Deepak Reddy, who joined three months ago, is currently in a 'learning and connecting' phase. He has identified six immediate priorities, including accelerating gold growth, improving non-gold credit performance, and organizational delayering. However, a comprehensive strategic roadmap and firm guidance for the company's next phase will only be presented around Q4 FY26. The company is also awaiting final approvals for the Bain transaction, expected within a month.

Capital Adequacy and Funding Profile

Despite segment-specific stress, Manappuram remains well-capitalized with a CRAR of 28% and a net worth of ₹12,712 crore. The company successfully raised $200 million through syndicated ECB routes during the quarter. Standalone borrowing costs decreased by 12 basis points, and management expects further reductions as they leverage their strong banking relationships to support the gold loan expansion.

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