Buy Manappuram Finance: Leading brokerage firm ICICI Securities has reiterated a Buy recommendation on Manappuram Finance, assigning a revised target price of Rs 355. The recommendation was highlighted in ICICI Securities’ research report dated February 16, 2026, reflecting growing confidence in the company’s evolving business strategy, improving asset quality, and attractive long-term valuation.
According to the report, Manappuram Finance is entering a new phase of transformation driven by strategic realignment, management changes, and a renewed focus on its core gold loan business. While past volatility—particularly in the microfinance segment—has raised concerns among investors, ICICI Securities believes that the worst is now behind the company, creating a favorable risk-reward opportunity at current levels.
Positive Outlook Driven by Strategic Shift
ICICI Securities notes that Manappuram Finance’s future prospects appear promising due to a new strategic direction. This includes:
- Change in management approach
- Reduced exposure to microfinance (MFI)
- Improved asset quality controls
- Higher growth with lower yield in core gold loan operations
The brokerage believes this refined strategy positions Manappuram for sustainable growth over the medium to long term, especially as gold loans continue to remain a stable and profitable lending segment in India’s NBFC landscape.
Addressing Past Concerns: A Balanced Perspective
Despite optimism, ICICI Securities acknowledges that Manappuram Finance’s track record has not been without challenges. One of the key concerns historically has been the company’s experimentation with lower-yield gold loans.
Between FY20 and FY23, gold loan yields declined by approximately 457 basis points, when the company attempted to grow volumes at the cost of margins. Similarly, the microfinance business went through a full cycle:
- MFI mix peaked at 26% in FY24
- Dropped sharply to 16% in FY25
- Further declined to 9% in 9MFY26
These fluctuations raised questions around earnings stability and risk management. However, ICICI Securities emphasizes that these cycles now appear to be largely played out, with structural corrections already in place.
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Valuation Comfort Tilts the Scale in Favor
One of the strongest arguments supporting the Buy recommendation is valuation comfort. ICICI Securities highlights that Manappuram Finance is currently trading at highly attractive levels compared to its historical averages and sector peers.
Key valuation metrics include:
- Standalone business valued at ~1.7x FY28E Price-to-Book (P/B)
- MFI segment valued at 1x P/B
- Home finance and other businesses also valued at 1x P/B
Given that asset quality stress in the microfinance segment appears to have peaked, the brokerage believes the downside risk is limited, while upside potential remains significant.
Revised Target Price: Rs 355
Based on its Sum-of-the-Parts (SoTP) valuation methodology, ICICI Securities has raised its target price on Manappuram Finance to Rs 355, from the earlier target of Rs 305.
The upward revision is primarily due to:
- Shift of valuation base from FY27E to FY28E book value
- Improved outlook for standalone gold loan business
- Stabilization in microfinance operations
- Better visibility on earnings growth trajectory
This re-rating reflects growing confidence in the company’s medium-term profitability and capital efficiency.
Strong Historical Performance Often Overlooked
While short-term volatility has drawn attention, ICICI Securities urges investors to view Manappuram Finance’s performance through a broader historical lens.
Between FY19 and FY24, the company delivered:
- Earnings CAGR of 18.8%
- Average Return on Assets (RoA) of ~5%
- Average Return on Equity (RoE) of ~21.8%
These metrics underline the company’s ability to generate strong shareholder returns across economic cycles, reinforcing its credentials as a fundamentally sound NBFC.
Core Gold Loan Business: A Key Growth Engine
The gold loan segment remains the backbone of Manappuram Finance’s business model. ICICI Securities expects this segment to deliver high growth at relatively lower yields, a strategy that prioritizes volume expansion, asset quality, and risk control over aggressive margin chasing.
With gold prices remaining firm and demand for secured credit rising, the gold loan business is expected to offer:
- Stable cash flows
- Lower credit risk
- Better capital efficiency
This makes Manappuram well-positioned to benefit from both rural and semi-urban credit demand in the coming years.
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Investment View: Risk-Reward Looks Favorable
ICICI Securities concludes that while Manappuram Finance’s journey has not been linear, the company is now better prepared for the next phase of growth. The combination of:
- Cleaned-up balance sheet
- Reduced MFI risk
- Proven profitability track record
- Attractive valuation multiples
creates a compelling investment case for long-term investors.
