Manappuram Finance’s Profit Down by 48%
DSIJ Intelligence / 07 Feb 2013
Manappuram Finance, yesterday, posted a disappointing set of Q3FY13 numbers. For the December quarter of 2012, the company's income from operations de-grew by 19% to Rs 586 crore, while its net profit plunged by 48% to Rs 84 crore on a YoY basis. Market participants waved a red flag to the counter today in its early trades and the scrip is now trading lower by 10% to Rs 38.2 per share. The following table gives us an overview of the company's performance:
| Particulars | Dec 2012 | Dec 2011 | % change |
|---|---|---|---|
| Income From Operations | 586.2 | 726.4 | -19.30 |
| Employee Costs | 80.35 | 87.2 | -7.86 |
| Admin. And Selling Expenses | 5.7 | 20.6 | -72.33 |
| Other Expenses | 62.35 | 76.08 | -18.05 |
| Operating Profit | 437.81 | 542.53 | -19.30 |
| Other Income | 11.26 | 6.7 | 68.06 |
| Depreciation | 15.41 | 13.33 | 15.60 |
| Interest | 309.09 | 296.36 | 4.30 |
| Tax | 40.19 | 78.17 | -48.59 |
| Net Profit/(Loss) | 84.38 | 161.37 | -47.71 |
| Diluted EPS | 1 | 1.91 | -47.64 |
| | | | |
| Particulars | Dec 2012 | Dec 2011 | Change BPS |
| Capital Adequacy Ratio (%) | 25.23 | 20.8 | 443 |
| Net NPA (%) | 0.77 | 0.19 | 58 |
| Return on Assets (%) | 2.6 | 4.97 | -237 |
| Return on Equity (%) | 12.57 | 28.53 | -1596 |
The company posted a de-growth in its business, which is evident from the fact that as on December 31, 2012, the loan book decreased by 15% to Rs 1,04,860 crore on a YoY basis. Manappuram Finance is majorly is into gold loans, which comprises around 99% of the total advances. They also de-grew at the same rate. Its gold stock, in terms of million tonnes, also stood at 54.65 against 69.54 tonnes in the similar period last year.
Return on Assets of the company for the quarter decreased by 237 basis points to 2.6%. Further, on account of lower profit, Return on Equity went significantly lower at 12.57% against 28.53% in Q3FY12. The company faced serious headwinds when it came to asset quality, which worsened substantially. The Net NPA for the quarter increased by 58 basis points to 0.77% on a YoY basis.
As on December 31, 2012, the Capital Adequacy Ratio (CAR) of the company improved considerably, standing at 25.23% against 20.8% in the similar quarter last year, which we believe is at a decent level. This is after company the raised around Rs 318 crore through privately placed debentures with institutional as well as retail investors.
Manappuram added 96 new branches during the December quarter taking the total branch network to 3140 by the end of the quarter. Overall, we believe that the company is facing serious headwinds in terms of business growth and on the asset quality front. These factors have a negative impact on the bottomline of the company. On the valuation front, the company is available at a TTM PE of 6x.
We would advise our readers to stay away from the counter as there could be a further downside after the disappointing third quarter results. For the Bond holders of the company, we believe that there is no reason to worry, as the company is in a very comfortable position to pay its dues (interest) in a timely manner.
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