Manappuram Finance, a gold loan financier, saw a surge in its shares by 6% after the RBI lifted the ban on its unit, Asirvad Micro Finance. The RBI had initially imposed restrictions on four NBFCs, including Asirvad Micro Finance, due to concerns over usurious pricing and high markups. However, the central bank removed these restrictions after the companies took remedial measures and submitted compliance reports.
The removal of the ban was anticipated and reflected in the rebound of Manappuram’s share price to pre-ban levels. Analysts at Jefferies raised the price target for Manappuram Finance to ₹190 from ₹167, maintaining a “hold” rating. The stock is generally rated as a “buy,” with a median price target of ₹187.50.
While Manappuram’s valuation appears attractive, there may be a near-term earnings drag due to stress in the microfinance portfolio, which could affect valuations. Despite the potential challenges, the removal of the ban on its unit is a positive development for Manappuram Finance, and investors are optimistic about its performance moving forward.
Overall, the market response to the lifting of the ban on Manappuram’s unit has been positive, and the company is expected to continue its growth trajectory in the coming months. Investors are advised to closely monitor the company’s financial performance and market dynamics to make informed decisions regarding their investments in Manappuram Finance.
