January 19, 2018

Investment Rationale

Manappuram Finance (MFL), an NBFC is in the business of offering gold loans, microfinance, housing loans and commercial vehicles with a total customer base of 3.6mn. The company’s AUM comprises of gold loan (81%), microfinance (13%), housing finance (2.3%), vehicle finance (2.2%) and other loans (1%).

MFL AUM has grown at a healthy 8.2% CAGR over the last 5 years whereas Net profit has grown at strong 38% CAGR during the same period. The growth in Net profit was driven by 21.2% growth in NII and expansion in net interest spread. It is increasing focus on housing finance and micro finance which would aid further growth for the company.

MFL has a strong Capital Adequacy Ratio of 28.7% as against the RBI limit of 15% which gives it ample scope to increase leverage and add new synergistic product segments like Micro Finance, Mortgage & Housing and Commercial Vehicle.

MFL’s asset quality has been improving in the last two quarters with Gross NPA at 1.2% and Net NPA at 0.9%. We expect asset quality to remain stable in FY19.

Manappuram Finance Ltd.

Technical Recommendation

119.65 CMP (`)

Stop Loss– Closing (`) 105

Target (`) 150

Time Horizon 1-2 Months

Data Matrix

Equity (`Cr) 168.4

EPS (`) 8.5

PE (`) 14.0

Face Value (`) 2.0

P/BV(x) 2.9

Dividend Yield (%) 1.7

Beta 1.9

52 Week High / Low 73/126

ROE% 18.2

Avg. Weekly Volume 65,21,650

Technical Outlook Technical Chart (Weekly)

Manappuram has a history of volatile swings. After listing in July 2010, it gained exponentially in first six months and moved from roughly 35 to 99. The trend changed as it moved to single digit figure in next two and half year and made a record low at 9.80 in July, 2013. Though it recovered swiftly in the following months, but failed to surpass the monthly hurdle around 40 and again slipped lower.

After such volatile swings, it finally gained momentum in May, 2016 and made a new record high at 106.90.

It again underwent into a consolidation phase and witnessed fresh breakout from the same in the passing month. We advise using recent dip to accumulate fresh in the given range of 118-121 with close below stop loss of 105 for the target of 150.

Source : Capitaline

BSE Code 531213

NSE Code MANAPPURAM

Sector NBFC

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Follow-up of Recommendations Follow-up of Recommendations

Scrip Name Rec. Date Rec. Price CMP (19th Jan, 2018) Closing S/L Target

RBLBANK 05-Jan-2018 539.70 523.30 510 620

INDIACEM 22-Dec-2017 183.55 184.70 180 220

KTKBANK 20-Nov-2017 158 158.85 154 195

EXIDEIND 03-Nov-2017 204.85 221.20 214 245

EMAMILTD 27-Oct-2017 1243.85 1262.25 1220 1510

* Closing S/L Trailed

Rec. Date Scrip Name Rec. Price

Exited On Return

% Remarks

08-Dec-2017 DCBBANK 188.15 18-Jan-2018 0.45 Booked at 189 as trailed SL triggered at 189

13-Oct-2017 DABUR 321.95 18-Jan-2018 13.37 Booked Profit at 365 as target met.

15-Sep-2017 BERGEPAINT 264.45 25-Sep-2017 -6.22 Booked loss as SL triggered at 248

01-Sep-2017 EXIDEIND 204.25 26-Sep-2017 1.34 Booked profit as trailed SL triggered at 207

04-Aug-2017 KTKBANK 148.70 27-Sep-2017 -3.16 Booked loss as trailed SL triggered at 144

24-Aug-2017 ICICIPRULI 422.90 15-Sep-2017 0.50 Booked profit as trailed SL triggered at 425

12-May-2017 RALLIS 246.35 10-Aug-2017 -5.41 Booked loss as trailed SL triggered at 233

13-April-2017 ALLCARGO 174.75 08-Aug-2017 -3.29 Booked loss as trailed SL triggered at 169

07-July-2017 HEIDELBERG 132.10 04-Aug-2017 -3.86 Booked loss as trailed SL triggered at 127

30-June-2017 DABUR 290.90 02-Aug-2017 3.47 Booked profit as trailed SL triggered at 301

16-June-2017 HDIL 91.60 04-Aug-2017 -12.11 Booked loss as SL triggered at 80.50

02-June-2017 EMAMI 1139.10 28-June-2017 -6.50 Booked loss as SL triggered at 1065

10-Feb-2017 JBMA 277.60 27-June-2017 -3.09 Booked loss as trailed SL triggered at 269

26-May-2017 HSIL 340.15 20-June-2017 17.46 Booked Profit at 399.55

05-May-2017 NCC 94.55 25-May-2017 -7.98 Booked loss as trailed SL triggered at 87

21-April-2017 KESORAMIND 167.10 05-May-2017 -11.43 Booked loss as SL triggered at 148

03-March-2017 DABUR 277.25 03-May-2017 0.63 Booked profit as trailed SL triggered at 279

31-March-2017 JKTYRE 131.95 24-April-2017 20.39 Booked Profit at 160

03-March-2017 JISLJALEQS 94.30 26-April-2017 21.35 Booked Profit at 114.80

24-March-2017 KTKBANK 138.80 11-April-2017 14.41 Booked Profit at 154.75

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S. No. Statement Answer

Tick appropriate

Yes No

I/we or any of my/our relative has any financial interest in the subject company? [If answer is yes, nature of Interest is given below this table]

No

I/we or any of my/our relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance?

No

I / we or any of my/our relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance?

No

I/we have received any compensation from the subject company in the past twelve months?

No

I/we have managed or co-managed public offering of securities for the subject company in the past twelve months?

No

I/we have received any compensation for brokerage services from the subject company in the past twelve months?

No

I/we have received any compensation for products or services other than brokerage services from the subject company in the past twelve months?

No

I/we have received any compensation or other benefits from the subject company or third party in connection with the research report?

No

I/we have served as an officer, director or employee of the subject company? No

I/we have been engaged in market making activity for the subject company? No

Team Members

Ajit Mishra ajit.mishra@religare.com

SS..No. Name

(s) of RA. Signtures of RA

Serial Question of question which the signing RA needs to make a separate declaration / answer

Yes No.