Manappuram Finance Limited

Manappuram Finance Limited reported a consolidated AUM of INR52,125 crores for Q3 FY26, marking a robust 13.8% Q-o-Q and 17.9% Y-o-Y increase. The gold loan segment was the primary growth driver, with its AUM surging 23% Q-o-Q and 58.2% Y-o-Y to INR38,754 crores. Consolidated PAT for the quarter stood at INR239 crores, showing a 9.8% Q-o-Q growth but a 14.3% Y-o-Y decline. Standalone PAT was INR381 crores, down 15.9% Y-o-Y.

The company's gold loan AUM growth is attributed to a strategic shift towards higher-ticket, lower-yield customers, which led to a 22% AUM increase despite a less significant rise in customer count. Management expects gold loan yields to stabilize around 18-18.15% from next year, leveraging its online gold loan (OGL) app for efficient repayments and LTV management. The gold loan business is positioned as a core growth engine, with industry-wide AUM projected to scale sharply over the next two financial years.

Non-gold segments, including vehicle finance, MSME, and housing finance, continue to grapple with elevated NPA levels, with housing at 5%, vehicle at 14%, and MSME at 6%. In response, the company has scaled down these businesses, tightened underwriting norms, and is enhancing collection infrastructure and LOS platforms. Management anticipates a return to growth mode for these segments from Q1 FY27, following the strengthening of systems, processes, and controls.

Asirvad Microfinance reported a loss of INR156 crores in Q3 FY26, an improvement of 6.9% sequentially from INR168 crores in Q2 FY26. Its AUM stood at INR6,091 crores, experiencing a 1.2% Q-o-Q and 39.2% Y-o-Y decline. The new book, which constitutes approximately one-third of the portfolio, demonstrates a strong collection efficiency of 99.78%. Management expects two-thirds of the total portfolio to achieve similar collection efficiencies within the next two quarters, signaling a positive trajectory for the subsidiary.

Manappuram is actively pursuing significant strategic initiatives, including a comprehensive transformation of its branch infrastructure with new designs slated for next year. The company aims to make most customer acquisition processes paperless within the next 1-2 quarters and is implementing new AI security systems from this month. Additionally, it has gone live with co-lending, with a minimum of three partners expected to be operational within the next 2-3 weeks, and is developing a new technology stack over 2-3 years.

The company maintains a robust balance sheet with capital adequacy comfortably above regulatory thresholds and ample liquidity, which increased to INR4,000 crores at quarter-end. An interim dividend of INR0.50 per share was declared for the quarter. The final regulatory approval for Bain Capital's 18% primary equity investment (9% initially, 9% via convertible warrants) is expected within one month, which will establish Bain as a joint promoter alongside existing promoters who will retain over 28% stake.