The stock is reacting to Bain Capital acquiring stake in the company. Most of the analysts having coverage on the stock, have raised their price targets on the gold loan financier.
However, it must be noted that shares of Manappuram Finance are in the Futures and Options (F&O) ban, which means no new positions can be created in the stock in today’s trading session.
Manappuram Finance and Bain Capital announced a $1 billion deal on Thursday, where Bain Capital will look to acquire up to 42% stake in two steps.
Bain Capital will hold joint control with the existing promoters, who will also be holding a 28.9% stake.
CLSA has an outperform rating on Manappuram and has raised its price target on the stock to ₹270 from ₹225 earlier, which is the highest on the street for the stock.
CLSA is anticipating a healthy re-rating for Manappuram as the new management takes over.
Under a new CEO, Manappuram plans to fast track the gold loan segment, invest and scale up the MFI and housing and vehicles business along with upgrading the company’s tech capabilities.
Jefferies has also raised its price target on Manappuram to ₹235 from ₹205 earlier but maintained its “hold” rating on the stock.
Although it called the Bain deal a positive, Jefferies said that a part of this is already factored into the price.
The brokerage also said that there are execution issues in ramping up the gold loan business and strengthening its franchise in non-gold segments.
“Clarity around new management team, growth strategy, better visibility around execution will be key to further rerating,” Jefferies wrote in its note.
Morgan Stanley remains “equalweight” on Manappuram with a price target of ₹180. It expects the stock to trend towards its open offer price of ₹236 unless there happens to be a price or time adjustment.
DAM Capital has raised its price target on Manappuram to ₹255 from ₹215 earlier. It said that the Bain partnership will address concerns and enhance investor confidence on future execution.
It also said that the current valuation multiple of 1.05 times financial year 2027 price-to-book is benign and offers a favourable risk-reward.
Shweta Daptardar, Vice President of Diversified Financials at Elara Securities, believes the Bain Capital deal marks a turning point in Manappuram’s business journey.
Elara Securities has revised its valuation approach for Manappuram, increasing the forward multiple to 1.3x. Previously, the firm had applied a 1x multiple but now sees justification for a slightly higher valuation.
Out of the 17 analysts having coverage on Manappuram, seven analysts each have a “buy” and “hold” recommendation on the stock, while three others have a “sell” rating.
Shares of Manappuram Finance are currently trading 5.8% higher at ₹230.28. The stock is up 15% in the last one month.
