NBFC IIFL Finance Ltd, gold loan provider Manappuram Finance Ltd, housing finance company Repco Home Finance Ltd and microfinance and MSME loans provider Fusion Finance Ltd saw their shares falling up to 5 per cent today, following their December quarter results.
Manappuram Finance Ltd fell 6.4 per cent to hit a low of Rs 181.80 on BSE. IIFL Finance declined 2.73 per cent to a low of Rs 322.30. Repco Home Finance slipped 2.28 per cent to Rs 349.15. Fusion Finance was down 3.86 per cent at Rs 163 on BSE.
MOFSL said Manappuram Finance’s consolidated PAT fell 52 per cent YoY and was 44 per cent lower than its estimates. NII grew 10 per cent and was in-line but a flat pre-PPoP YoY was a 9 per cent miss.
"We cut our FY25/FY26/FY27 PAT estimates by 15 per cent/5 per cent/3 per cent to factor in lower loan growth and higher credit costs. Over FY24-27, we estimate a CAGR of 15 per cent/13 per cent in gold/consolidated AUM and 10 per cent in consolidated PAT, with consolidated RoA/RoE of 4.7 per cent/18 per cent in FY27. Reiterate our Neutral rating on the stock with a target of Rs 215," MOFSL said.
On IIFL Finance, MOFSL noted that the NBFC's Q3 PAT fell 85 per cent YoY while NII declined 22 per cent YoY. The numbers fell on lower assignment income and lower gain on fair value changes.
IIFL Finance suggested that there were Income Tax (IT) raids on all the office premises of IIFL and its group companies and also at the residence of a few key employees, including Nirmal Jain. IT raids were conducted under Section 132.
Under this, the IT team checked documents and took data and statements from various employees. The IT team was trying to investigate undisclosed income and unreported profits. The IT team will make an appraisal report, which can take three months, which will then go to the assessing officer. Subsequently, IIFL will be required to reply to the observations/demands made in the appraisal report.
"IIFL reported a weak quarter, marked by elevated credit costs and a slight deterioration in asset quality due to a cyclical slowdown in the economy. While consolidated AUM declined YoY, the company resumed strong growth in its gold loan portfolio, which grew by 40 per cent QoQ. IIFL’s management shared that with the embargo on the gold lending business now lifted, the company is well-positioned for the next phase of high-quality growth in secured products like gold loans and LAP," MOFSL said. It suggested a target of Rs 415 on the stock.
In the case of Repco Home, Q3 PAT grew 7 per cent, which was in line with MOFSL estimates. NII grew 9 per cent YoY and beat its estimates by 5 per cent. Opex rose 31 per cent YoY and was 12 per cent higher than MOFSL estimates.
"Valuations at 0.5 times FY27E P/BV are indeed attractive, but we believe that the company will continue to under-deliver on its loan growth guidance because of: 1) its inability to scale up loan growth in core home loans, and 2) too much focus on improving asset quality and profitability, which is detrimental to loan growth," it said while suggesting a target of Rs 400 on the stock.
Fusion Microfinance, meanwhile, reported a net loss in Q3, as NIM contracted due to interest income reversals and the reversal of all net Deferred Tax Assets (DTA) to date. Fusion has received approval from BSE and NSE for its rights issue and is now awaiting SEBI’s clearance. SEBI has raised a few queries, but the company expects to receive approval soon. The Rights Issue is pending final regulatory approval.
"Fusion, in our view, can deliver an AUM CAGR of 3 per cent and PAT CAGR of minus 11 per cent over FY24-FY27E. We estimate an RoA/RoE of 3.2 per cent/15 per cent in FY27. We reiterate our Neutral rating on the stock with a revised target of Rs 175 (based on 0.9x Sep’26E P/BV)," MOFSL said.