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.