Manappuram Finance saw a sharp rise in its share price, gaining over 8% after exiting the Futures & Options (F&O) ban list. The stock opened at ₹182.05 and climbed to an intraday high of ₹193.60. This movement indicates increased market activity and heightened investor interest following the stock’s removal from the restriction list.
Manappuram Finance shares saw a significant rise of over 8% after the stock was removed from the Futures and Options (F&O) ban list. The stock opened at ₹182.05 on the Bombay Stock Exchange (BSE), marking an intraday low, and quickly gained momentum, reaching an intraday high of ₹193.60.
According to Sachin Gupta, Senior Research Analyst at 5paisa, the stock had experienced a sharp decline in the previous week, falling from ₹209.35 to ₹168.83. However, on Monday, the stock opened with a gap-up, signaling a potential reversal. Gupta noted that the stock had bounced back from key technical levels on the weekly chart, namely the Middle Bollinger Band and the 100-day Exponential Moving Average (EMA), suggesting renewed buying interest among traders. Furthermore, on the daily chart, the stock has been trading above its 200-day EMA, which traditionally supports a bullish outlook.
Despite these positive signs, Gupta also pointed out that the Relative Strength Index (RSI) is currently around 49, reflecting a neutral stance, and there is a negative crossover on the daily chart, which could indicate a potential slowdown in momentum.
Sachin Gupta, Senior Research Analyst at 5paisa, further elaborated on the technical structure of Manappuram Finance, suggesting that the stock may see favorable conditions around the ₹185-188 range. He noted the importance of setting a stop loss at ₹174, while the potential upside could target ₹197 and ₹205 based on the current price action and chart patterns.
In a related development, on Friday, 14 February, the National Stock Exchange (NSE) imposed a ban on Manappuram Finance in the Futures and Options (F&O) segment. This ban restricted trading in the stock within the F&O market, but the stock has since been removed from the ban list, triggering renewed investor interest and a subsequent rise in its price.
Manappuram Finance experienced a 5% decline in its share price, dropping to ₹183 per share on February 14, following the release of its Q3FY25 results. The disappointing performance was largely attributed to challenges faced within its microfinance segment, which had been affected by a loan disbursement ban that lasted an entire quarter. As a result, the company’s consolidated net profit for Q3FY25 fell by 50%, dropping to ₹282 crore compared to the previous period.
The difficulties in the microfinance sector were further reflected in the increase in bad loans and provisions. The provisions related to bad loans in the microfinance division saw a sharp fourfold rise, reaching ₹473 crore. This marked a significant financial strain on the company, contributing to the overall decline in its quarterly performance.
The Reserve Bank of India had imposed a ban on loan disbursements in Manappuram Finance’s microfinance segment at the start of the quarter. The ban was put in place due to concerns over “usurious” interest rates and excessive mark-ups on funding costs, and it was only lifted last month. This disruption significantly impacted the company’s microfinance revenue, which saw a 5% decline, falling to ₹665 crore for the quarter.
In its analysis, Axis Securities highlighted that with the lifting of the ban, Manappuram Finance is looking to cautiously revive growth within its Microfinance Institution (MFI) segment as the challenges tied to the restrictions gradually ease. The company’s current focus has shifted towards bolstering its gold loans and secured non-gold loans segments. Manappuram is also strategically placing an emphasis on larger ticket-size gold loans while considering adjustments in interest rates for the MFI sector. These changes may have a notable impact on the company’s profit margins moving forward.
Axis Securities expects that Manappuram Finance’s margins will remain stable, projected to be between 13% and 13.2% over the fiscal years 2026-2027. While the company continues to navigate the challenges in its microfinance segment, it anticipates that near-term pressures on credit costs will persist. However, with expectations of improvement in the company’s Cost-to-Income (CE) ratio and a gradual shift in the portfolio towards secured assets, Axis Securities believes that credit costs will begin to decrease over the medium term.
In its report, the brokerage also provided a target price for Manappuram Finance Ltd. at ₹220, based on their analysis of the company’s performance and outlook. The current market price of the stock stands at ₹191.35.