RESULT UPDATE

MANAPPURAM GENERAL FINANCE

Diversification efforts visible; auctions normalise
India Equity Research| Banking and Financial Services
COMPANYNAME
Manappuram Finance's (MGFL) Q4FY16 PAT (standalone) of INR1.25bn EDELWEISS 4D RATINGS
(up >28% QoQ/79% YoY) surpassed estimates. The strong performance Absolute Rating BUY
was driven by lower auction losses (with rise in gold prices), which helped Rating Relative to Sector Performer
NIMs improve by >90bps QoQ. The quarter also marked the company’s Risk Rating Relative to Sector High
return to growth path (4.6% QoQ in gold loans) and impressive growth in Sector Relative to Market Overweight
MFI, home loans, CV loans, leading to >8% QoQ growth in consolidated
AUMs. With gold prices stabilising and auctions normalising, we expect
MARKET DATA (R: MNFL.BO, B: MGFL IN)
profitability to improve. Further diversification benefits will entail lower
CMP : INR 50
risks to mono-line business model. This, along with valuation of 1.4x Target Price : INR 60
FY18E P/ABV, lends comfort. Maintain ‘BUY’. 52-week range (INR) : 50 / 20
This report contains Q4FY16/Q3FY16 earnings analyst meet highlights Share in issue (mn) : 841.2
M cap (INR bn/USD mn) : 42 / 633
Better growth momentum, NIMs spike aids revenue traction Avg. Daily Vol.BSE/NSE(‘000) : 3,069.3
AUM stood at INR101bn (registering healthy 4.8% QoQ growth), benefitting from >20%
QoQ disbursements growth. Moreover, NIMs jumped by >90bps QoQ to 15.7% gaining SHARE HOLDING PATTERN (%)
from better lending yields, a derivative of lower auctions (INR1.85bn versus run-rate of Current Q3FY16 Q2FY16
~INR5.5bn earlier). The auction benefit flowed from rise in gold prices and company’s Promoters * 33.7 32.6 32.3
strategy to focus on shorter tenure products. Further aided by funding costs benefit, NII MF's, FI's & BK’s 40.1 39.4 14.0
spurted >40% YoY (we are expecting NII CAGR of > 15% over FY16-18E). FII's - - 27.7
Others 26.3 28.0 26.0
Rising gold prices to alleviate concerns on auction under-recoveries * Promoters pledged shares : NIL
(% of share in issue)
Asset quality was stable with GNPLs at 1.0% (1.1% in Q3FY16, despite transition to
120dpd). Provisions during the quarter were elevated given transition on standard PRICE PERFORMANCE (%)
asset provisioning (from 30bps to 35bps). Incrementally, following implementation of EW Banks and
75% LTV (60% for shorter duration), higher gold prices, concerns on asset quality and Stock Nifty Financial
auctions under-recoveries will likely taper off. Services Index

1 month 31.5 (0.5) 2.7

Outlook and valuations: Growth tailwinds in sight; maintain ‘BUY’ 3 months 75.7 11.9 20.1

We see growth levers in place viz: a) stabilising gold prices; b) lower LTV/gram 12 months 49.1 (5.1) (8.3)
(INR1,691, versus incremental potential of INR1,900-2,000); and c) lower auctions and
now expect better traction in AUM growth (upwards of 20% over FY16-18). This with
normalised auction and controlled cost will lead 15% CAGR in earnings. Diversification Kunal Shah
+91 22 4040 7579
of product profile and scale up of non-gold AUM will be added trigger. We revise our
kunal.shah@edelweissfin.com
estimates upwards by 4%/10% over FY17/FY18 and raise our target multiple to INR60
(1.5x FY18E consolidated P/BV, earlier INR40). We maintain ‘BUY/SP’. Nilesh Parikh
+91 22 4063 5470
Financials (INR mn) nilesh.parikh@edelweissfin.com

Year to March Q4FY16 Q4FY15 Growth (%) Q3FY16 Growth (%) FY16 FY17E FY18E Prakhar Agarwal
Net revenue 3,896 2,825 37.9 3,601 8.2 13,347 15,129 17,860 +91 22 6620 3076
prakhar.agarwal@edelweissfin.com
Net profit 1,248 697 79.2 973 28.3 3,372 3,698 4,499
Dil. EPS (INR) 1.5 0.8 78.3 1.2 27.6 4.0 4.4 5.3 Alok Shah
Adj. BV (INR) 31.9 33.9 36.6 +91 22 6620 3040
alok.shah@edelweissfin.com
Price/ Adj book (x) 1.6 1.5 1.4
Price/ Earnings (x) 12.5 11.4 9.4 May 13, 2016
Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset. Edelweiss Securities Limited
 Banking and Financial Services

Diversification drive: Handsome progress

One of the key highlights of the quarter was growth momentum in new business, which
resulted in consolidated AUM growth of >8% QoQ to INR114bn. With the intent of
diversifying risks associated with mono-line business model and to capture emerging
opportunities (capitalising on benefits from synergies), management started to diversify and
traction in same has been good. Among new businesses, growth was particularly driven by
MFI segment (up >40% QoQ to INR10bn, forming 9% of overall AUMs) with decent run in
home loan and CV businesses (up >50%/>45%, albeit on lower base). With entire leadership
to drive new businesses being in place, management expects new business to contribute up
to 25% to total AUM by FY18. Management highlighted that key driver will likely be MFI
segment, given the vast opportunity landscape and the fact that MFIs that have converted
to SFB has gone slow during the transition phase.

Table 1: Strong ramp up in non-gold businesses

Consolidated loan book Growth
FY16 FY17 FY18 FY17 FY18 CAGR FY16-18
Gold loan 100,806 124,195 148,835 23.2% 19.8% 21.5%
Non-Gold AUM 952 1,428 1,928 50.0% 35.0% 42.3%
- Microfinance 9,998 16,997 25,495 70.0% 50.0% 59.7%
- CVs 1,298 1,947 2,628 50.0% 35.0% 42.3%
- Home loans 1,286 1,929 2,604 50.0% 35.0% 42.3%
- LAP 442 663 895 50.0% 35.0% 42.3%
- Other loans 510 765 1,033 50.0% 35.0% 42.3%
Consolidated AUMs 101,758 125,623 150,763 23.5% 20.0% 21.7%
Source: Company, Edelweiss research

Table 2: Non-gold AUM to contribute more than 15% of profits by FY18

Standalone Consolidated
FY17 FY18 FY17 FY18
Net profit (INR mn) 3,698 4,499 4,218 5,304
Networth (INR mn) 29,328 31,871 30,060 33,408
RoA (%) 3.3% 3.3% 3.7% 3.8%
RoE (%) 13.0% 14.7% 14.6% 16.7%
EPS (INR) 4.4 5.3 5.0 6.3
Book value (INR) 34.9 37.9 35.7 39.7
Diluted P/E 11.4 9.4 10.0 8.0
P/BV 1.4 1.3 1.4 1.3
Source: Edelweiss research
Note: RoA and RoE have been calculated on average AUM

Focus on cost management persists

MGFL, since few quarters, has been focusing on cost management. Constant branch
network (for past 8 quarters) are clear testimony about same. Green shoots of improvement
were visible during the quarter, with opex/AUM declining to 7.7% (versus 8.4% in previous
quarter). Expect to see falling trend to continue as leverage benefits play out.

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Chart 1: Strong disbursements perk up AUMs Chart 2: Proportion of bank borrowing increases
120 80

96 64

72 48

(INR bn)
(INR bn)

48 32

24 16

0 0

Q1FY15

Q2FY15

Q3FY15

Q4FY15

Q1FY16
Q1FY15

Q2FY15

Q3FY15

Q4FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

Q2FY16

Q3FY16

Q4FY16
AUM - gold loans Disbursements OD/WCL/STL Retail borrowings CPs Subordinated Debt

Chart 3: Asset quality stable despite transition to 120-day norm

2.1

1.7

1.3
(%)

0.8

0.4

0.0
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16
Gross NPA - Gold loan Net NPA - Gold loan

Chart 4: Business/branches continuing to improve as AUM perks up

35

28

21
(INR mn)

14

0
Q1FY14

Q2FY14

Q3FY14

Q4FY14

Q1FY15

Q2FY15

Q3FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16
Q3FY14

Q4FY15

Source: Company, Edelweiss research

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Chart 5: Yields stabilization, a key monitorable
25.0 12.5

20.0 10.0

15.0 7.5

(%)
(%)
10.0 5.0

5.0 2.5

0.0 0.0
FY13 FY14 FY15 FY16E FY17E FY18E
Yield on advances Cost of funds Net interest margins (RHS)
Source: Company, Edelweiss research

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Financial snapshot (INR mn)

Year to March Q4FY16 Q4FY15 % change Q3FY16 % change FY16 FY17E FY18E
Operating income 6,025 4,941 21.9 5,709 5.5 21,794 25,005 29,723
Interest expanded 2,156 2,189 (1.5) 2,159 (0.1) 8,849 10,309 12,356
Other income 27 74 (63.7) 51 (47.5) 402 432 492
Net revenues 3,896 2,825 37.9 3,601 8.2 13,347 15,129 17,860
Operating expenses 1,758 1,559 12.8 1,903 (7.6) 7,303 8,287 9,532
Pre-provision profit 2,138 1,267 68.8 1,698 25.9 6,044 6,842 8,328
Provisions & write-offs 91 77 17.8 57 60.5 324 688 929
Operating profit 2,047 1,190 72.1 1,642 24.7 5,719 6,154 7,398
Depreciation 145 122 19.0 136 6.1 531 594 632
Profit before tax 1,903 1,068 78.2 1,505 26.4 5,188 5,561 6,766
Tax 654 371 76.3 533 22.8 1,816 1,863 2,267
PAT 1,248 697 79.2 973 28.3 3,372 3,698 4,499
Diluted EPS (INR) 1.5 0.8 78.3 1.2 27.6 4.0 4.4 5.3

Ratios
Gross NPA - Gold loan(%) 1.0 1.2 1.1 1.0 1.2 1.4
Net NPA - Gold loan (%) 0.7 1.0 0.9 0.7 0.9 1.0
Tax rate (%) 34.4 34.8 35.4 35.0 33.5 33.5
B/V per share (INR) 32.5 34.9 37.9
Adj book value / share 31.9 33.9 36.6
Price/ Book (x) 1.5 1.4 1.3
Price/ Adj. book (x) 1.6 1.5 1.4
Price/ Earnings 12.5 11.4 9.4

Change in Estimates
FY17E FY18E
New Old % change New Old % change Comments
NII 14,625 14,642 (0.1) 17,282 16,882 2.4
PPOP 6,248 6,146 1.7 7,695 7,153 7.6
Provisions 688 802 (14.2) 929 1,002 (7.2) Rising gold prices to alleviate
concerns on auction under-
recoveries
PAT 3,698 3,554 4.0 4,499 4,091 10.0
NIMs 11.0 11.2 10.8 11.0

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Q4FY16 earnings call takeaways

With respect to growth metrics

 Growth has come in on the back of new businesses and new gold lending business
model. Management expects Non-gold loan book will form 25% by end of FY18 . Gold
loan will grow by 20% by FY18, with the technology enabled collection, auction will
come down and will drive the growth.
 The growth in non-gold book will largely come from MFI book, wherein there is huge
scope to growth given huge opportunity landscape and the fact that MFIs that have
converted to SFB has gone slow during the transition phase. To put in numbers MFI will
likely reach INR40bn, Home finance - INR10bn with similar AUM for CV, and the MSME
will be around INR5bn by end of FY18.

 Company has made a strategic shift to short tenure gold loans which has helped
reduce auctions and improve profitability. For MGFL, 3 month and 6 month constitute
around 90% of the book. These short term loans and are not much sensitive on
yields and thus yields are unlikely to be under pressure
 LTV is around 60% for the 1 year loan and for 3 month product have 75% LTV.
 Gold holdings – 59.6 tonnes (58.34 tonne in Q3FY16). At current gold holdings levels, if
prices goes up, AUM should go up and with operational leverage kicking in, this should
boost profitability.
 With many of the banks exiting gold loans business and revamp of gold loan portfolio
by the company, management is confident of increasing its market share.
 With the MFI business new states contribute ~22% of the AUMs

With respect to margins

 Have not tweaked the card rate during the quarter. NIMs have showed improvement
during the quarter deriving the benefit from lower loss on auctions.

 85-90% of the debt is floating rates, the management is eyeing to shift towards longer
tenure bonds so the same rate benefit may not flow through in FY17.

 Net yield on gold loan – 24.5% , Cost of fund – 10.45%.

 Currently the borrowing cost from banks are closer to base rate ( 9.5-9.7%)

 Lending rates in MFI segments are coming down currently < 24% ( versus 26% earlier).
Cost of funds are around 14%

Asset quality

 Gross NPAs came in at INR978mn – on 120dpd. Most of the gross NPAs relate to
accounts which are regularly paying us. Loss on account of theft, etc was only 0.12%
AUM.

 Auctions have reduced since company is focusing on lower tenure loans. Going forward,
auctions would remain at the same levels.

 Higher provisions was on account of change in standard asset provisioning norm

( 35bps versus 30bps earlier)

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 Management is confident that asset quality within different business segments will be
maintained with sufficient collateral, manageable LTVs and strong team

Other highlights

 Ticket size in microfinance is ~INR20,000.

 Dividend payout to be maintained at existing rate

 The leverage is current 3.5x and management seems to be comfortable with 5-6x
leverage.
 On the incremental basis the LTV/gms would have been higher by 10%

 Plans are to strengthen existing branch network, there are lot of potential that can be
extracted from these segments.

 Expect to see the declining trend in opex/AUM ratio ( start to be visible in Q4FY16)

 Plan to come up with corporate debit card where customer can withdraw which will
help the growth

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Manappuram Finance – Q3FY16 earnings call takeaways

With respect to growth metrics

 Growth has come in on the back of new businesses and new gold lending business
model. Entire gold loan book is made up of new products. This is one of the main
reason for increase in profitability.
 Company has made a strategic shift to short tenure gold loans which has helped
reduce auctions and improve profitability.
 Gold holdings - 58.34 tonnes (57.3 tonne in Q2FY16). At current gold holdings levels, if
prices goes up, AUM should go up and with operational leverage kicking in, this should
boost profitability.
 With many of the banks exiting gold loans business and revamp of gold loan portfolio
by the company, management is confident of increasing its market share.
 Auctions during the quarter was INR3.9bn (compared to >8bn over previous quarter).
 New customer addition – 0.29mns. Total live customers – 1.9mns. Company has seen
20% customer addition in last 1 year.
 Average gold loan tenure is ~3 to 4 months.
 For new locker based facilities offered – total customers are 1,000 and gold in lockers
stand at 8kgs.

With respect to margins

 Cost of funds reduced by 50bps. ~20bps reduction in cost of funds can be attributed to
reduction in base rates. Overall cost of funds reduced by better negotiation with
banks and with banks resorting to CPs. Going forward proportion of debentures may
come down whereas proportion of CPs and banks would go up.
 Yield have gone up owing to lower auctions (savings seen in auctions) since majority
of loans is for 3 months.
 Interest accrued sitting in Balance sheet was 3.76% of AUM against 6.7% of AUM, a
year ago.
 Interest rate for 3 months loans (LTV-75%) is higher than 12 month loans (LTV-70%).

Asset quality
 Gold NPAs was at 2.5% on 90dpd. Most of the gross NPAs relate to accounts which
are regularly paying us. Loss on account of theft, etc was only 0.1% AUM.
 Company will move to 120 and 90 dpd as per RBI stated timelines only.
 Auctions have reduced since company is focusing on lower tenure loans. Going forward,
auctions would remain at the same levels. Thus, NIMs should also be protected.

Other highlights
 Commenced insurance broking business from January 2016; this should add fee
income going forward
 Management is confident that asset quality within different business segments will
be maintained with sufficient collateral, manageable LTVs and strong team

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 Manapurram is adequately capitalized and its subsidiaries would easily get capital as
and when required from parent company. Subsidiaries would be able to leverage on
banking relationship of Manappuram which shall endeavour to keep cost of funds
under tab. Capital infusion is proposed in Aashirvad in next year.
 RoA for microfinance business – 4.3%
 Going forward microfinance business be adding 500 branches per year and gold
business will add 100 branches every year in un-penetrated geographies. New branches
would be opened in states such as Maharashtra, UP, Bihar, etc.
 Ticket size in microfinance is ~INR20,000. Collection efficiency has been ~100%. Impact
of Tamil Nadu floods is minimal on asset quality of microfinance business. Microfinance
business has been expanded to various other states and hence exposure to TN has
reduced.
 Total employees at 16,564; headcount declined by 1% QoQ. Employee expenses has
increased owing to INR100mn of bonus payout. Going forward, employee expenses
should continue to remain at current levels.
 Dividend payout to be maintained at existing rate

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Company Description
The Manapurram Group was started in 1949 by Late Mr. V. C. Padmanabhan, with focus
primarily on money lending activities. The group has come a long way in >65 years operating
five companies under its fold, strong distribution network of 3,293 branches spread across
27 states, employee base of ~16,500 and a live customer base of ~1.93million as of
March,2016.

Manappuram Finance, Manappuram Group’s flagship company, is the leading gold loan
providing NBFC based out of Kerala, with ~INR101bn assets under management. It is
present in the (collateralised) micro-finance space (average ticket size of ~INR20k), with the
main line of business being ‘lending against household jewellery’. It does not incrementally
provide loans to jewellers, banks, or against bullion as per the regulatory requirements. It
has transitioned from a hire purchase company to a gold loan company in view of the
market fallout

Investment Theme
MGFL’s earnings have been volatile due to regulatory whip, auction and accounting policy
change. With writing off of stressed pool during aggressive growth phase and conservative
policy of recognising income, NPL management should be better. Also, the RBI has reposed
importance to organised way of monetising idle gold indicating long-term sustainability of
business model. Key monitorable for the stock will be emergence of stability in key business
metrics namely, margins, growth and asset quality performance. MGFL is also focused on
diversifying its business model with MFI, CV and housing loans estimated to constitute more
than 25% in three years

Key Risks
• We believe competition intensity in gold loan financing is bound to rise in the next few
years, posing a risk to NIMs enjoyed by specialised gold loan financiers like
Manappuram.

• Like any other financial asset, demand and asset quality of gold loans is susceptible to
price fluctuations of underlying collateral (gold).
• The company runs the risk of providing easy access to liquidity for stolen jewellery. It
also runs the key man risks at the branch level and possibility of collusion between
borrowers and loan approvers

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Financial Statements (Standalone entity)

Key Assumptions Income statement (INR mn)
Year to March FY15 FY16 FY17E FY18E Year to March FY15 FY16 FY17E FY18E
Macro Interest income 19,462 21,734 24,934 29,638
GDP(Y-o-Y %) 7.2 7.4 7.9 8.3 Interest expended 8,727 8,849 10,309 12,356
Inflation (Avg) 5.9 4.8 5.0 5.2 Net interest income 10,735 12,885 14,625 17,282
Repo rate (exit rate) 7.5 6.8 6.0 6.0 - Fee & forex income 347 462 504 578
USD/INR (Avg) 61.1 65.0 67.5 67.0 Net revenues 11,083 13,347 15,129 17,860
Sector Operating expense 6,684 7,834 8,880 10,164
Credit growth 11.0 14.0 16.0 16.0 - Employee exp 3,109 3,988 4,571 5,274
Deposit growth 12.0 15.0 15.0 15.0 - Depn /amortisation 539 531 594 632
Bank's base rate (%) 9.8 9.5 9.0 9.0 - Other opex 3,036 3,315 3,716 4,258
Wholesale borr. cost (%) 8.8 8.5 8.5 8.5 Preprovision profit 4,399 5,513 6,248 7,695
G-sec yield 7.8 7.3 7.0 7.0 Provisions 275 324 688 929
Company Profit Before Tax 4,124 5,188 5,561 6,766
Op. metric assump. (%) Less: Provision for Tax 1,417 1,816 1,863 2,267
Yield on advances 22.3 22.5 22.2 21.7 Profit After Tax 2,707 3,372 3,698 4,499
Net interest margins 10.2 11.2 11.0 10.8 Reported Profit 2,707 3,372 3,698 4,499
Cost of funds 10.7 9.8 9.6 9.4 Shares o /s (mn) 841 841 841 841
- employee cost (3.9) 28.3 14.6 15.4 Basic EPS (INR) 3.2 4.0 4.4 5.3
- rent (15.0) 2.1 7.7 6.0 Diluted shares o/s (mn) 841 841 841 841
Tax rate (%) 34.4 35.0 33.5 33.5 Adj. Diluted EPS (INR) 3.2 4.0 4.4 5.3
Balance sheet assumption (%) Dividend per share (DPS) 1.8 1.8 1.8 2.0
Number of branches 3,293 3,293 3,343 3,418 Dividend Payout Ratio(%) 56.0 44.9 40.0 37.0
Disbursement growth 20.9 47.0 10.7 11.2
Gold loan tenure 2.6 2.3 2.3 2.3 Growth ratios (%)
AUMs (in tonnes)/branch 28.1 30.6 37.2 43.5 Year to March FY15 FY16 FY17E FY18E
Gross NPLs 1.2 1.0 1.2 1.4 Revenues 2.1 20.4 13.3 18.1
Prov Cov 17.2 22.4 25.0 28.0 NII growth 4.6 20.0 13.5 18.2
Opex growth (3.9) 17.2 13.4 14.5
PPP growth 12.8 25.3 13.3 23.2
Provisions growth (41.4) 18.2 111.9 35.2
Adjusted Profit 19.8 24.6 9.6 21.7

Operating ratios
Year to March FY15 FY16 FY17E FY18E
Yield on advances 22.3 22.5 22.2 21.7
Net interest margins 10.2 11.2 11.0 10.8
Cost of funds 10.7 9.8 9.6 9.4
Spread 11.7 12.6 12.5 12.3
Cost-income 60.3 58.7 58.7 56.9
Tax rate 34.4 35.0 33.5 33.5

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Balance sheet (INR mn) RoE decomposition (%)

As on 31st March FY15 FY16 FY17E FY18E Year to March FY15 FY16 FY17E FY18E
Share capital 1,682 1,682 1,682 1,682 Net int. income/assets 10.2 11.2 11.0 10.8
Reserves & Surplus 24,591 25,686 27,645 30,189 Non int. income/assets 0.3 0.4 0.4 0.4
Shareholders' funds 26,274 27,368 29,328 31,871 Net revenues/assets 10.5 11.6 11.3 11.2
Short term borrowings 68,416 81,937 100,333 122,765 Operating expense/assets (6.3) (6.8) (6.7) (6.4)
Long term borrowings 15,503 14,460 17,706 21,664 Provisions/assets (0.3) (0.3) (0.5) (0.6)
Total Borrowings 83,918 96,397 118,039 144,429 Taxes/assets (1.3) (1.6) (1.4) (1.4)
Long Term Liabilities 1,094 2,263 2,372 2,538 Total costs/assets (7.9) (8.7) (8.6) (8.4)
Def. Tax Liability (net) (296) (391) (300) (300) ROA 2.6 2.9 2.8 2.8
Sources of funds 110,990 125,638 149,439 178,539 Equity/assets 24.3 23.4 21.3 19.2
Gross Block 3,983 4,839 5,439 6,314 ROAE (%) 10.6 12.6 13.0 14.7
Net Block 1,671 1,841 1,847 2,083
Capital work in progress 9 10 10 11 Valuation parameters
Intangible Assets 43 48 48 54 Year to March FY15 FY16 FY17E FY18E
Total Fixed Assets 1,723 1,898 1,905 2,147 Adj. Diluted EPS (INR) 3.2 4.0 4.4 5.3
Non current investments 1,676 435 381 427 Y-o-Y growth (%) 19.8 24.6 9.6 21.7
Cash and Equivalents 8,944 16,333 15,928 18,539 BV per share (INR) 31.2 32.5 34.9 37.9
Loans & Advances 92,351 100,807 124,195 148,836 Adj. BV per share (INR) 30.5 31.9 33.9 36.6
Current assets (ex cash) 6,161 8,427 9,403 11,128 Diluted P/E (x) 15.6 12.5 11.4 9.4
Trade payable 242 269 282 302 P/B (x) 1.6 1.5 1.4 1.3
Other Current Liab 1,794 1,994 2,090 2,236 Price/ Adj. BV (x) 1.6 1.6 1.5 1.4
Total Current Liab 2,036 2,263 2,372 2,538 Dividend Yield (%) 3.6 3.6 3.5 3.9
Net Curr Assets-ex cash 4,125 6,163 7,031 8,590
Other Assets 2,171 - - -
Uses of funds 110,990 125,638 149,439 178,539
BVPS (INR) 31.2 32.5 34.9 37.9

Peer comparison valuation

Market cap Diluted P/E (X) P/B (X) ROAE (%)
Name (USD mn) FY17E FY18E FY17E FY18E FY17E FY18E
Manappuram General Finance 633 11.4 9.4 1.4 1.3 13.0 14.7
Dewan Housing Finance 891 7.1 6.3 1.1 1.0 16.0 16.5
HDFC 27,588 24.8 21.5 5.2 4.7 22.1 23.0
Indiabulls Housing Finance 4,518 10.9 9.3 2.7 2.4 25.4 27.4
LIC Housing Finance 3,467 12.9 11.8 2.2 1.9 19.6 18.5
Magma Fincorp 317 10.0 10.5 1.0 0.9 10.0 8.8
Mahindra & Mahindra Financial Services 2,558 17.2 13.3 2.5 2.2 15.4 17.7
Muthoot Finance 1,262 9.6 8.1 1.4 1.3 15.1 16.2
Power Finance Corp 3,450 3.7 3.4 0.6 0.5 16.0 15.1
Reliance Capital 1,494 9.6 8.0 0.6 0.6 6.7 7.5
Repco Home Finance 620 21.6 17.6 3.7 3.1 18.4 19.0
Rural Electrification Corporation 2,431 3.2 2.9 0.5 0.4 16.4 16.1
Shriram City Union Finance 1,564 14.8 11.5 2.1 1.8 14.8 16.7
Shriram Transport Finance 3,636 15.2 12.1 2.1 1.8 14.8 16.2
Median - 11.2 9.9 1.8 1.6 15.7 16.4
AVERAGE - 12.3 10.4 1.9 1.7 16.0 16.7
Source: Edelweiss research

12 Edelweiss Securities Limited

 Manappuram General Finance

Additional Data
Directors Data
Jagdish Capoor Chairman (Non-Executive) V P Nandakumar Managing Director & CEO
B N Raveendra Babu Executive Director Shailesh J Mehta Director
V R Ramachandran Director P Manomohanan Director
Rajiven V.R Director E A Kshirsagar Director
Pradeep Saxena Director Dr. Amla Samanta Director

Auditors - S R Batliboi & Associates

*as per last annual report

Holding - Top10
Perc. Holding Perc. Holding
Baring India Investments 12.58 WF Asian Reconn Fund 4.53
Dhawan Ashish 2.91 DSP Blackrock Investment Manager 2.61
Morgan Stanley Asia/Singapore 1.74 BRIC LI Mauritius Tradings 1.54
Mousseganesh 1.20 Merrill Lynch Capital Markets 1.15
Wellington Management Group LLP 0.88 Tata Asset Management 0.64
*as per last available data

Bulk Deals
Data Acquired / Seller B/S Qty Traded Price
26 Nov 2015 Small Cap World Fund Inc Sell 8550000 22.30
11 Sep 2015 Ashish Dhawan Buy 9004871 20.20
11 Sep 2015 Small Cap World Fnd Inc Sell 14673614 20.23
*in last one year

Insider Trades
Reporting Data Acquired / Seller B/S Qty Traded
12 Apr 2016 Nandakumar V P Buy 507922.00
06 Apr 2016 NANDAKUMAR V P Buy 600000.00
04 Apr 2016 NANDAKUMAR V P Buy 1000000.00
14 Jan 2016 NANDAKUMAR V P Buy 1100000.00
12 Jan 2016 V.R RAMACHANDRAN Buy 60000.00
*in last one year

13 Edelweiss Securities Limited

 RATING & INTERPRETATION

Company Absolute Relative Relative Company Absolute Relative Relative

reco reco risk reco reco Risk

Allahabad Bank HOLD SU M Axis Bank BUY SO M

Bajaj Finserv BUY SO L Bank of Baroda BUY SP M
DCB Bank REDUCE SU M Dewan Housing Finance BUY SO M
Federal Bank BUY SP L HDFC BUY SP L
HDFC Bank BUY SO L ICICI Bank BUY SO L
IDFC Bank BUY SP L Indiabulls Housing Finance BUY SO M
IndusInd Bank BUY SP L Karnataka Bank BUY SP M
Kotak Mahindra Bank HOLD SP M LIC Housing Finance BUY SP M
Magma Fincorp BUY SP M Mahindra & Mahindra Financial Services HOLD SU M
Manappuram General Finance BUY SP H Max India BUY SO L
Multi Commodity Exchange of India BUY SP M Muthoot Finance BUY SO M
Oriental Bank Of Commerce HOLD SP L Power Finance Corp HOLD SP M
Punjab National Bank BUY SP M Reliance Capital BUY SP M
Repco Home Finance BUY SO M Rural Electrification Corporation HOLD SU M
Shriram City Union Finance BUY SO M Shriram Transport Finance BUY SO L
SKS Microfinance BUY SO M South Indian Bank BUY SP M
State Bank of India BUY SP L Union Bank Of India HOLD SU M
Yes Bank BUY SO M

ABSOLUTE RATING
Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria
Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe
within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING
Ratings Criteria
Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return

14 Edelweiss Securities Limited

 Manappuram General Finance

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91-22) 4009 4400, Email: research@edelweissfin.com

Nirav Sheth
Head Research
nirav.sheth@edelweissfin.com

Coverage group(s) of stocks by primary analyst(s): Banking and Financial Services

Allahabad Bank, Axis Bank, Bajaj Finserv, Bank of Baroda, DCB Bank, Dewan Housing Finance, Federal Bank, HDFC, HDFC Bank, ICICI Bank, IDFC Bank,
Indiabulls Housing Finance, IndusInd Bank, Karnataka Bank, Kotak Mahindra Bank, LIC Housing Finance, Max India, Multi Commodity Exchange of India,
Manappuram General Finance, Magma Fincorp, Mahindra & Mahindra Financial Services, Muthoot Finance, Oriental Bank Of Commerce, Punjab National
Bank, Power Finance Corp, Reliance Capital, Rural Electrification Corporation, Repco Home Finance, State Bank of India, Shriram City Union Finance,
Shriram Transport Finance, South Indian Bank, SKS Microfinance, Union Bank Of India, Yes Bank

Recent Research

Date Company Title Price (INR) Recos

12-May-16 OBC Stress elevated; structural 84 Hold

challenges to persist;
Result Update
10-May-16 Repco Home Growth traction maintained; 630 Buy
Finance asset quality on strong turf;
Result Update
09-May-16 Reliance Insurance and broking dents 410 Buy
Capital earnings; Result Update

Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe Rating Interpretation

Buy Hold Reduce Total Rating Expected to

Rating Distribution* 156 60 12 228 Buy appreciate more than 15% over a 12-month period
* 3 stocks under review
Hold appreciate up to 15% over a 12-month period
> 50bn Between 10bn and 50 bn < 10bn
743
Reduce depreciate more than 5% over a 12-month period
Market Cap (INR) 158 62 8
594

One year price chart

446
(INR)

50
297
40
149 30
(INR)

- 20
Apr-14

Sep-14
Feb-14

Mar-14

Jun-14

Dec-14
Jul-14

Aug-14

Oct-14

Nov-14
May-14
Jan-14

10

0
Dec-15
Dec-15
Aug-15

Oct-15

Apr-16
Nov-15
May-15

Sep-15

Jan-16

Feb-16

Mar-16
Jun-15

Jul-15

Manappuram General Finance

15 Edelweiss Securities Limited

Banking and Financial Services

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 Manappuram General Finance
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