Manappuram Finance Limited — Q4 FY25 earnings call

Call held 9 May 2025

Management summary

Manappuram Finance delivered a resilient performance in its core gold loan business, which saw robust AUM growth and customer additions. However, the consolidated bottom line was severely impacted by a one-time loss in its microfinance subsidiary, Asirvad, due to industry-wide stress and high credit costs. Management is pivoting towards a more secured lending mix, targeting 90% secured loans in the long term, supported by a strategic capital infusion from Bain Capital.

Highlights

  • Consolidated Revenue for FY25 reached ₹10,041 crore, a 12.51% YoY growth.

  • Consolidated PAT for Q4 FY25 stood at a loss of ₹203 crore, primarily due to microfinance subsidiary stress.

  • Gold loan AUM grew 18.7% YoY to ₹25,586 crore, now accounting for 59.5% of consolidated AUM.

  • Asirvad Microfinance reported a significant Q4 loss of ₹626 crore with write-offs of ₹565 crore.

  • Standalone profit after tax for the full year was ₹1,783 crore, reflecting 7.6% YoY growth.

  • Vehicle and Equipment Finance AUM rose 16.1% YoY to ₹4,773 crore.

  • Board declared an interim dividend of ₹0.50 per share for the quarter.

  • Capital adequacy remains strong with a consolidated CRAR of 30.9% and net worth of ₹12,432 crore.

Concerns

  • Microfinance Sector Stress

Key financials

3 periods

Headline

  • Gold Loan AUM
    ₹25,586 Cr
    YoY +18.7% QoQ +4.4%
  • Standalone GNPA
    2.8%
  • CRAR
    30.9%
  • Net Worth
    ₹12,432 Cr

Q4

  • Consolidated PAT
    ₹-203 Cr

FY25

  • Consolidated Revenue
    ₹10,041 Cr
    YoY +12.5%

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

Share of AUM
₹40,372 Cr Total
  • Gold Loans ₹25,586 Cr 63.4%
  • Asirvad Microfinance ₹8,189 Cr 20.3%
  • Vehicle & Equipment Finance ₹4,773 Cr 11.8%
  • Home Finance ₹1,824 Cr 4.5%

Guidance & targets

Volume

  • Gold AUM Growth Volume · FY26 · High confidence >20%
    We expect a growth of over 20% during the current year.

    — V.P. Nandakumar, MD & CEO

  • Consolidated AUM Growth Volume · FY26 · Medium confidence ~20%
    I expect that [consolidated AUM growth] to be around 20%.

    — V.P. Nandakumar, MD & CEO

Profitability

  • Return on Equity (ROE) Profitability · FY26 · Medium confidence 18%
    So our target is to reach around 18% and we hope in a few quarters from now we will reach a level of 18% ROE.

    — V.P. Nandakumar, MD & CEO

Market Share

  • MFI Portfolio Share Market Share · FY26 · Medium confidence ~10%
    So I expect the MFI portfolio to go down to somewhere around 10% towards the end of this year in the consolidated book.

    — V.P. Nandakumar, MD & CEO

Risks & concerns

  • Microfinance Sector Stress

    high

    Increased borrower default from over-leverage and operational disruptions led to a ₹626 crore loss in Asirvad.

    Both acknowledged

  • Yield Compression in Gold Loans

    medium

    Yields dropped 55 bps as the company adjusted pricing to attract higher-ticket borrowers and match competition.

    Analyst acknowledged

  • Regulatory Scrutiny on Gold Loans

    medium

    RBI's draft gold loan framework may introduce additional procedures for customer verification and appraisals.

    Both downplayed

Areas of evasion (1)

  • Specific quantification of cost of borrowing benefits from potential rate cuts.

Q&A highlights

3 direct
Gold Loan Yield Compression Direct
On the gold loan if you compare it with the previous quarter, we have seen a drop of almost 55 basis points in the income. That is the reason for the drop in profitability during the quarter.

Explains the sequential dip in standalone profitability despite AUM growth, highlighting competitive pricing pressure.

Asked by Shreya Shivani, CLSA

Asirvad Microfinance Credit Costs Direct
The write-off number for the quarter Rs. 565 crores and the auction during the quarter Rs. 108 crores.

Quantifies the massive cleanup exercise in the MFI book which led to the consolidated quarterly loss.

Asked by Kushan Parikh, Morgan Stanley

RBI Draft Gold Loan Guidelines Direct
The major part of the representation is that, yes, maintain the LTV at the present level... we don't expect much disruption with the introduction of these.

Management downplays regulatory risks, suggesting the draft guidelines align with existing NBFC practices.

Asked by Shreepal Doshi, Equirus

2 min read 5 chapters

Detailed narrative

Microfinance Stress Triggers Consolidated Loss

The quarter was defined by significant stress in the Asirvad Microfinance subsidiary, which posted a loss of ₹626 crore. This was driven by industry-wide over-leverage and operational disruptions, leading to write-offs of ₹565 crore. Management has implemented stringent sourcing rules, reducing the sanction rate to 34% in February '25 compared to 64% in September '24, and expects the MFI share of the total book to decline to 10% by year-end.

Gold Loan Resilience Amid Yield Pressure

The core gold loan portfolio remains robust, with AUM growing 18.7% YoY to ₹25,586 crore. Despite this growth, yields saw a sequential drop of 55 basis points as the company adjusted pricing to attract higher-ticket borrowers (₹5 lakh and above) and counter bank competition. Management remains optimistic, guiding for >20% growth in gold AUM for FY26, supported by digital onboarding and rural demand.

Strategic Capital Infusion from Bain Capital

The company is in the process of a capital infusion from Bain Capital, which will bring in 18% capital (9% equity and 9% warrants) into the parent company, Manappuram Finance. This capital is intended to support growth in secured segments, including gold loans, MSME, and affordable housing. The deal is currently awaiting regulatory approvals from the RBI, CCI, and SEBI, with closure expected before the end of the calendar year.

Diversification Strategy Gains Traction

Non-gold segments continue to show mixed results. Vehicle and Equipment Finance AUM rose 16.1% YoY to ₹4,773 crore, though management tightened underwriting norms in the two-wheeler and farm equipment segments due to asset quality challenges. Home Finance reached an AUM of ₹1,824 crore, growing 20.8% YoY and contributing a profit of ₹23 crore for the full year, aligning with the long-term goal of a 90% secured lending mix.

Navigating Regulatory Changes

Management addressed the RBI's draft gold loan framework issued in April 2025, expressing confidence that it will not disrupt interest rates or operations significantly. They have submitted representations through industry associations to maintain LTV at 75% inclusive of interest. The company noted that many proposed procedures, such as continual LTV monitoring and customer verification, are already part of their internal board-approved policies.

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