Capitaline

Analyst Meet / AGM 30-Jan-20

Conference Call

Manappuram Finance

Expects stable asset quality for next few quarters, gold holding to rise 10-15% in FY2021

Manappuram Finance conducted a conference call on 28 January 2020 to discuss the financial performance of the company for quarter ended December 2019. V.P. Nandakumar, MD&CEO of the company addressed the call.
Highlights:

The company has posted strong 36% growth in the consolidated AUM mainly driven by the gold loan segment with increase in gold holding and higher gold prices. The gold loan LTV stood at 51%.
The gold holding has increased to 73.5 tonnes, while customers base increased to 32.9 million end December 2019. The company expects 10-15% growth in gold holding in FY2021.
The company has continued regular auctions of overdue account at Rs 14 crore in Q3FY2020 and Rs 100 crore in 9MFY2020.
The performance of Asirvad microfinance continues to be ahead of industry with strong growth in customers additions. The company has capped state wise exposure at 10%, while the district wise exposure is capped at 0.5-1.0%. These caps have to be achieved in next three years. The disbursements of the company were 100% non-cash.
The microfinance book in Assam stands at Rs 43 crore end December 2019, which is based in the non-affected districts.
The housing and vehicle finance companies have exhibited decent growth in Q3FY2020. The vehicle finance book consists of 87% used vehicles and 13% is new vehicles.
The company processed nearly 6000 applications for 2-wheelers loans on a monthly basis with the rejection rate of 20%. In the commercial vehicle segment, close to 1500 applications are processed monthly with a rejection of 25%. In housing loan segment, about 600 applications are processed monthly with a rejection of 40%.
The share of on gold portfolio stands at 33% of the consolidated loan book.
The company expects to maintain stable asset quality for the next few quarters.
The company expects 2% credit cost including standard provisions in the microfinance business.
The company is well placed in terms of ALP and do not face any liquidity issue.
The company has reduced cost of funds to 9.1% in Q3FY2020 from 9.3% in Q2FY2020.
The company expects the operating leverage benefit to continue in ensuing quarters. The company expects the opex to AUM ratio to decline 100 bps going forward.

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