Manappuram Finance Ltd shares may have limited upside potential following the 18 per cent rally on the counter in the past one month, MOFSL's latest target price suggests. MOFSL said Manappuram Finance’s consolidated profit after tax improved in the March quarter and was a 58 per cent beat on its estimates. A decline of 3 per cent in net interest income (NII) was in line, while a drop of 6 per cent in operating expenses was 11 per cent lower than MOFSL's estimates.

Gold loan segment performance
MOFSL said Manappuram Finance delivered a strong performance in the gold loan segment, supported by rising gold prices, healthy demand, and a gradual shift in customer preference toward formalized financing. However, growth in the non-gold portfolio has remained subdued, primarily due to ongoing asset quality concerns, even as the VF and Asirvad MFI segments show early signs of improvement, MOFSL said.

Manappuram Finance share price target 

Following the Q4 results, MOFSL said Manappuram Finance stock trades at 1.6 times estimated FY27 book value. Over FY26-28, it estimates a growth of 25 per cent in gold, 23 per cent consolidated assets,  and 66 per cent in consolidated PAT, compounded annually. The domestic brokerage estimated Manappuram Finance's return on asset (RoA) and (RoE) at 3 per cent and 14 per cent, respectively, in FY28. 

It reiterated 'Neutral' rating on the stock with a target price of Rs 315. The scrip closed at Rs 307.40 on Monday and MOFSL's target suggests less than 2 per cent upside potential on the counter.

"New offerings across consumption and income-generation gold loans and affordable housing are expected to aid in portfolio diversification. With a calibrated approach in non-gold segments (MFI and VF), along with a stable operating profile, the company is well positioned for healthy AUM growth in FY27," MOFSL said.

Asset quality is expected to improve across MFI and VF, supported by tighter underwriting, stronger credit controls and enhanced recovery efforts, MOFSL said. 

"In MFI, the new book (59 per cent of the MFI loans) continues to replace the legacy MFI pool (41 per cent), with higher CE, driving overall portfolio improvement; the legacy book is expected to reduce to 10 per cent by 3QFY27. In vehicle finance, focused collection actions and digital interventions have improved bounce recoveries. This portfolio rebalancing and operational strengthening should translate into moderation in credit costs and gradual improvement in asset quality," MOFSL said.