Manappuram Finance Limited: history, ownership, mission, how it works & makes money

A Brief History of Manappuram Finance Limited

Manappuram Finance Limited, founded in 1992, has its roots in the southern state of Kerala, India. The company was established by V.P. Nandakumar, who aimed to provide financial services tailored to the needs of the local population. Initially focusing on gold loans, Manappuram has significantly expanded its offerings over the years.

By 2003, Manappuram had established its first branch, which marked the beginning of its rapid network expansion. By the end of 2022, the company had grown to over 4,500 branches across India. This strategic growth allowed the company to capture a substantial market share in the non-banking financial company (NBFC) sector.

In 2010, Manappuram became the first Kerala-based NBFC to be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The IPO was launched at a price of ₹50 per share, raising approximately ₹.1,200 crore.

As of the most recent fiscal year ending in March 2023, Manappuram reported a total income of approximately ₹.4,326 crore, with a net profit of around ₹.785 crore. The company's loan book stood strong at approximately ₹.28,000 crore.

Over the years, Manappuram expanded its service portfolio to include microfinance, money transfer services, and insurance distribution. As of 2023, the company reported that its gold loan segment contributed to over 75% of the total revenue.

In the last few years, the company has also leveraged technology to enhance customer experience and streamline operations. They have introduced digital platforms for loan processing, which has improved efficiency and customer satisfaction.

Manappuram's commitment to corporate social responsibility is evident through various initiatives aimed at community development and financial literacy. In 2022, the company invested over ₹.30 crore in social initiatives.

Throughout its history, Manappuram Finance Limited has continuously adapted to changing market dynamics, ensuring that it remains one of the leading players in the Indian financial services sector.

A Who Owns Manappuram Finance Limited

Manappuram Finance Limited, a leading non-banking financial company (NBFC) in India, primarily focuses on gold loans. The company has seen significant institutional and individual participation in its shareholding structure. As of September 2023, the following ownership breakdown presents a clear picture of its major stakeholders:

The Manappuram Group, led by its founder and managing director, V.P. Nandakumar, plays a pivotal role in the company’s operations and governance. The company's stock is listed on major exchanges, including the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), where it garners considerable trading activity.

As of the second quarter of FY 2023, Manappuram Finance reported a total asset under management (AUM) of approximately ₹24,000 crores, primarily driven by its gold loan portfolio. The company has also maintained a robust net interest margin (NIM) of around 10.25%, showcasing its efficiency in loan operations.

The company’s stock performance has displayed fluctuations characteristic of the financial sector. In September 2023, the stock price hovered around ₹155 per share, representing an increase of over 30% year-to-date, reflecting positive investor sentiment amid improving financial metrics.

Manappuram Finance's capital adequacy ratio (CAR) stands at a strong 18.5%, which exceeds the regulatory requirement of 15% for NBFCs, indicating robust financial health and a cushion for potential lending growth. Additionally, the company has reported a return on equity (ROE) of approximately 18%, underscoring efficient utilization of shareholder funds.

In summary, Manappuram Finance Limited is characterized by a diverse ownership structure, with significant contributions from both institutional and retail investors. The company's strong financial indicators and strategic positioning within the gold loan market foster a compelling investment thesis for stakeholders.

Manappuram Finance Limited Mission Statement

Manappuram Finance Limited is a prominent non-banking financial company (NBFC) in India, primarily engaged in gold financing. The mission statement of the company reflects its commitment to providing easy access to financial services while ensuring customer satisfaction. The core focus lies in enhancing the quality of life for customers by providing them with secure and flexible financial solutions.

The mission statement emphasizes several key principles:

• To be a reliable partner in the financial aspirations of individuals.
• To offer accessible and transparent financial products.
• To promote ethical business practices and corporate governance.
• To leverage technology for enhancing customer experience.

As of the latest financial data from the second quarter of FY 2023-24, Manappuram Finance reported the following:

The company’s focus on sustainable growth and customer service is underscored by their continuous expansion in the gold loan segment. The commitment to transparency is evident in their operational procedures, which aim to build long-term relationships with customers.

In recent strategic initiatives, Manappuram Finance has also invested in digital platforms to facilitate online gold loans, enhancing accessibility for customers. This aligns with the mission of leveraging technology to meet evolving customer needs and preferences.

In terms of branches, as of July 2023, the company operates over 4,800 branches across India, further illustrating its drive to enhance customer reach and service quality.

The emphasis on ethical practices is reflected in the adherence to regulatory guidelines and the company's transparent dealings with customers, maintaining a high level of trust within the financial community.

Overall, Manappuram Finance Limited's mission statement and operational strategies position it as a customer-centric organization focused on financial inclusivity and service excellence.

How Manappuram Finance Limited Works

Manappuram Finance Limited is a leading non-banking financial company (NBFC) in India, primarily engaged in the business of gold loans. Founded in 1992, it has established a substantial presence in the financial services sector with a focus on providing secured loans against gold jewelry.

The company's core operations revolve around gold loan financing, which constitutes a significant portion of its total income. As of the first quarter of FY 2023, Manappuram Finance reported a gold loan portfolio of approximately ₹24,000 crore. The average loan-to-value (LTV) ratio maintained by the company is around 70%, emphasizing its conservative lending practices.

In addition to gold loans, Manappuram offers various financial products, including:

• Microfinance
• Vehicle loans
• Personal loans
• Insurance and foreign exchange services

The company operates through a vast network of branches across India, numbering over 4,500 as of September 2023. This extensive reach allows it to cater to a diverse clientele, particularly in semi-urban and rural areas where access to traditional banking services is limited.

According to the latest financial data for the quarter ended June 2023, Manappuram Finance reported total income of ₹1,267 crore, up from ₹1,200 crore in the same quarter the previous year. The net profit for the same period was approximately ₹270 crore, showcasing a year-on-year growth of 12%.

Below is a detailed table showcasing the financial performance of Manappuram Finance Limited over the last four quarters:

Manappuram Finance follows a risk-averse approach towards its lending practices. It maintains a provision coverage ratio (PCR) of over 60%, which indicates a strong buffer against potential loan defaults. The company also focuses on maintaining a diversified funding mix, utilizing both bank borrowings and retail deposits.

As of the end of FY 2023, the capital adequacy ratio (CAR) stood at 18%, well above the regulatory requirement of 15% set by the Reserve Bank of India. This strong capital position underscores the company's ability to absorb potential losses while supporting business growth.

In terms of market performance, as of October 2023, Manappuram Finance's shares are trading at approximately ₹112, with a market capitalization nearing ₹14,000 crore. The stock has demonstrated a year-to-date return of nearly 25%.

Manappuram continues to leverage technology, using digital platforms for disbursing loans and managing customer interactions, which enhances operational efficiency and customer experience. The company aims to expand its financial product offerings while ensuring robust risk management protocols are in place, strengthening its foothold in the competitive NBFC sector.

How Manappuram Finance Limited Makes Money

Manappuram Finance Limited, a non-banking financial company (NBFC) based in India, primarily generates its revenue through various channels, predominantly focusing on gold loans. As of March 2023, the company reported a total income of approximately ₹3,223 crore, showcasing a year-on-year increase of about 23%.

The key sources of revenue for Manappuram Finance include:

• Gold Loans: This remains the core business segment, contributing around 86% of total revenue. As of the latest financial results, the company had a gold loan portfolio worth approximately ₹25,000 crore, with an average loan-to-value (LTV) ratio of 75%.
• Micro Finance: Manappuram also offers microfinance services, targeting low-income groups. The microfinance segment accounted for about 8% of the total revenue, contributing approximately ₹250 crore in the last fiscal year.
• Insurance: The company has ventured into insurance products, contributing another 3% of the revenue, equating to around ₹100 crore.
• Other Financial Services: This includes a variety of offerings such as personal loans and commercial vehicle loans, contributing around 3% to the revenue as well.

The profitability of Manappuram Finance is also reflected in its margins. The net profit for FY 2022-23 was reported at approximately ₹716 crore, representing a net profit margin of around 22%.

In addition to these revenue streams, Manappuram Finance also benefits from a strong distribution network, leveraging more than 4,500 branches across India. This extensive reach enhances customer access and retention, facilitating continued growth in their primary business areas.

Asset quality is another critical component of their financial health. As of the latest reports, the company maintained a Gross NPA (Non-Performing Assets) ratio of 1.97%, reflecting effective credit management strategies.

Finally, the company's capital adequacy ratio stood at approximately 18.5%, which is well above the regulatory requirement of 15%, allowing for further financial resilience and expansion capacity.