After a muted FY26, Manappuram Finance saw profitability pick up in the June quarter (Q1FY27), with gold loans doing the heavy lifting and compensating for muted growth in its non-gold businesses.
Consolidated assets under management (AUM) grew 57% year-on-year to ₹69,635 crore, with gold loan AUM nearly doubling to ₹57,006 crore. Gold loans contributed 82% to consolidated AUM in Q1FY27, compared with 65% a year ago.
Higher gold prices and a gradual shift towards formalized financing buoyed gold loan demand even in a seasonally weak Q1. Manappuram is targeting around 25-30% growth in gold loans in FY27, while peer Muthoot Finance is targeting 15%.
Doubling down
Gold loan yield rose 60 basis points sequentially to 17.7% in Q1FY27, driven by corrective pricing actions. The profitability metric is expected to remain around 18%.
Manappuram is aggressively strengthening its gold lending franchise. It plans to open 500 new gold loan branches in FY27 following the removal of the Reserve Bank of India’s (RBI) prior-approval requirement.
While Manappuram has a more diversified lending portfolio than Muthoot, it is prioritizing asset quality and portfolio stabilization in its non-gold lending segments. Its long-term strategy is to keep 75% to 80% of consolidated AUM in gold loans, while capping microfinance exposure at 8% to 10%, compared with around 7% currently.
In vehicle finance, lending has been temporarily stopped as the company focuses on collections amid elevated GS-3 and asset-quality concerns.
Leadership test
Manappuram appointed Ashish Singh as its new MD and CEO, effective 1 January 2027. Under the new leadership, it plans to improve the performance of its diversified businesses through disciplined underwriting, with a thrust on sustainable profitability.
While this completes the leadership transition, Singh faces an uphill task of improving profitability following a sharp moderation in gold loan yields over the last two quarters, said HDFC Securities. It cautions that loan growth could decelerate significantly due to consolidation in gold prices, elevated competitive intensity and the RBI’s new regulations on loan-to-value norms.
So far in CY26, Manappuram's stock is up 13%, compared with a 24% decline in Muthoot Finance.
“This divergence could be due to margin outlook; Manapurram’s calculated NIM bottomed out last quarter and improved by 50bps sequentially to 10%, while Muthoot saw 300bps contraction,” said Akshat Agrawal, analyst at Nirmal Bang Institutional Equities.
Manappuram's RoA and RoE improved to 3.2% and 13.6%, respectively, in Q1FY27 from 2.8% and 11% in FY26. However, that improvement is largely captured in the current valuation, limiting the scope for further rerating, he added.
