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Manappuram Fin.
Our verdict on Manappuram Fin. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Gold loan yields are trending downwards towards the target range, reaching 19.7% in Q2 FY26 from 20.5% in the previous quarter. (1 in progress, 2 met, 1 exceeded across 4 tracked commitments)
“We expect that to be somewhere around 18.5 similar to the industry. But we will be able to protect our margin because our margin and borrowing cost is coming down”
Impairment of financial instruments (credit costs) for Asirvad Microfinance dropped by 48.9% QoQ, significantly exceeding the 30% reduction target. (1 exceeded, 1 missed, 1 in progress, 1 met across 4 tracked commitments)
“So in the coming quarters, we will see at least 30% reduction from the credit cost to what we reported in Q1.”
The branch expansion is currently stalled pending RBI approval, which management believes is linked to the pending Bain Capital transaction. (1 revised across 1 tracked commitment)
“The new regulation applicable from April 1, 2026, and we are adhering to the regulation, based on ticket size interest accrued for the contracted period will also be added. That will be the loan amount... And there will be a credit assessment in case of high-value borrowers.”
Expectation for final RBI approval for Bain Capital investment. — target: final approval
“So we expect the final approval to come through without much delay. Maybe we expect that to happen within another 1 month.”
The company is targeting a collection efficiency of 75% for the microfinance segment. — target: 75% (+3 more commitments)
“Manoj's expectation is that frankly is 75%. In that the collection efficiency stands above 99% and hope to maintain that with the guardrails, etcetera.”
See the full cited Management analysis of Manappuram Fin.
How durable is the business?
The company's capital adequacy remains exceptionally strong and has expanded further to 28.7%, providing a massive buffer for growth and risk absorption. (5 expanding)
“Our balance sheet remains healthy. Capital adequacy at 21.3%, well above the regulatory requirements.”
The digital moat is strengthening as the 'Online Gold Loan' (OGL) product now accounts for 85% of the total gold loan AUM, up from 82% in the previous quarter. (4 expanding, 1 stable)
“% SHARE OF OGL IN THE OVERALL GOLD AUM... 92%... First NBFC to launch Online Gold Loan (OGL) in September 2015”
Gold loan AUM grew significantly by 29.3% YoY, and its share in the consolidated AUM increased to 69% as the company aggressively pivots back to its core strength. (4 expanding, 1 contracting across 1 engine)
“Loans to MSME and allied businesses stood at INR3,351 crores with a disbursement of INR254 crores in Q4”
Gold loans have significantly expanded their dominance in the portfolio, growing from 59% to 65% of the total loan mix in a single quarter, driven by a 12.6% increase in AUM. (4 expanding, 1 contracting across 1 engine)
“Consolidated Gold Loan 50,953 Cr... 80%... yield of 17.3% for Q4 FY26”
Geographic concentration in South India remains stable at 63% of the gold loan branch network, maintaining the company's core regional strength. (2 stable across 1 engine)
“The home loan business with a total book of INR1,852 crores was down 2.6% quarter-on-quarter but higher year-on-year by about 1.5%.”
See the full cited Business Model analysis of Manappuram Fin.
Where does growth come from?
Borrowing costs are trending downwards, with a 12 basis point reduction in the standalone borrowing cost during the quarter, which management expects to continue. (2 accelerating, 3 steady across 5 signals)
“COST OF BORROWING (CONSOLIDATED) ... 9.4% [Q4FY25] to 8.6% [Q4FY26]”
The company is leveraging co-lending partnerships to reach new geographic areas where they do not currently have a physical presence.
“Co-lending partnerships have added a further origination channel, extending our reach to geographies where we have limited presence.”
The company is successfully lowering its operational costs relative to its loan book size, which should boost overall profitability. — Opex to AUM: -200 bps (+1 more signal)
“So we are expecting the consolidated ROE to improve because gold, we are, reducing our opex.it was the last 1 year has come down by 2 percentage opex to AUM.”
The microfinance division (Asirvad) is showing signs of recovery, with a significant shift toward a 'new book' of loans that has much higher collection efficiency.
“And in the new book, which is 59%, my ex-bucket collection efficiency stands at 99.83%.”
The microfinance subsidiary (Asirvad) is showing a sharp recovery in asset quality for its 'new book' (loans disbursed since Feb 2025), with collection efficiency reaching 99.83%. (3 accelerating, 2 reversing across 5 signals)
“ASIRVAD AUM (Rs. Cr) ... 8,189 [FY25] to 6,793 [FY26]”
See the full cited Future Growth analysis of Manappuram Fin.
What could break the thesis?
Capital adequacy has stabilized and remains well above regulatory minimums, with consolidated CRAR at 28.7%. (4 easing, 1 stable)
“CAPITAL ADEQUACY RATIO % Q4 FY25 31% ... Q4 FY26 21%”
The company relies on short-term funding like Commercial Paper, which can be risky if market liquidity dries up or interest rates spike suddenly. [MARGIN_COST]
“proportion of CPs only is 6.8% of consolidated borrowing”
The risk remains high; the company offloaded a portion of the stressed portfolio to an Asset Reconstruction Company (ARC) to manage profitability. (1 stable)
“In MSME, we had around 5% portfolio, which was unsecured. So the major challenge has come from that in MSME. And another thing, this quarter, we did some ARC that also has been bearing on the profitability.”
The risk remains high but management is actively re-strategizing. GNPA for the MSME/Vehicle segment is at 5%, but higher delinquency in specific sub-segments like farm equipment and two-wheelers led to slow disbursements and increased provisioning. (2 stable, 1 intensifying)
“Because of the higher delinquency, the business disbursement was slow during the quarter. The focus is more on collection and we have increased the provision coverage on vehicle finance to 24%.”
Asirvad MFI continues to report losses (INR 156 Cr loss in Q3 FY26), although the loss narrowed slightly from Q2 FY26 (INR 168 Cr). (1 stable)
“PAT before OCI ... Q3 FY26 -156 ... Q2 FY26 -168”
See the full cited Risk analysis of Manappuram Fin.
Read the full thesis on Manappuram Fin.
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