Manappuram Finance Ltd reported a Q2 profit surge, surpassing expectations, driven by robust loan demand. The consolidated net profit for the quarter ending Sept. 30 surged almost 37% to 5.58 billion rupees ($67.01 million). This exceeded analyst predictions of 4.98 billion rupees, according to data from LSEG.
Gold prices hit a record high earlier this year, displaying a year-on-year increase of over 20% for the quarter. This has been advantageous for gold financiers such as Manappuram, as customers pledge more gold as collateral for loans, contributing to overall growth.
Manappuram experienced a significant increase in interest income, rising over 27% to 20.44 billion rupees. The revenue from its gold loan business, which makes up about three-fourths of its total revenue, increased by 18.5% to 15.37 billion rupees. Additionally, its micro-finance arm recorded an impressive 53% growth in revenue.
However, the finance cost increased by more than 30% due to a high-interest rate environment, contributing to a 23% rise in total expenses. The RBI has raised rates by 250 basis points since May 2022 to curb surging prices.
While larger rival Muthoot Finance recently posted a nearly 15% rise in quarterly profit, Manappuram’s profit beat follows the August dismissal of a money laundering case against its CEO, V P Nandakumar, by a Kerala court. The case, brought by the country’s financial crime-fighting agency, had led to the freezing of Nandakumar’s assets, including shares in Manappuram Finance.
Manappuram’s shares closed 4.7% higher following the release of the results.
