Manappuram Finance: We continue to expect CAGR of 20% and 20% ROE this year: VP Nandakumar, Manappuram Finance

VP Nandakumar, MD, Manappuram Finance, says that the company has not been impacted by RBI‘s new regulations. He feels it is positive because the company is fully prepared for that through their online gold loan schemes, etc. The profitability remained pretty robust. Next year also on a consolidated level, they expect a CAGR of 20% and a profitability of the same level.

Let us first talk about the Q4 performance when it comes to your AUMs. You have closed in about 18.7% growth which is normally a little bit lower than your guided 20%. Do you believe that the impact of all the RBI-led regulations is now behind you and the company can deliver a better AUM for the full year as well as the next quarter?
VP Nandakumar: We have been guiding for about 20%. We reached 19%, 1% lower. Our performance has not been bad, but we will improve. RBI’s new regulation has not impacted us. We feel like it is only positive because we were fully prepared for that through our online gold loan schemes, etc. So, our profitability remained pretty robust. We hope next year also on a consolidated level, we expect a CAGR of 20% and the profitability of the same level we expect. We have fully implemented the RBI guidelines. We are fully okay with the latest guidelines also.Your NIMs as well fell to about 15%. What would you attribute that to and now that you are saying that things are on their way to recovery, what is it that we can expect in the next quarter or the full year?
VP Nandakumar: All the sectors we are in are doing well compared to last year. We are seeing a better performance this year. The other sectors are also doing well, like MSME, vehicles, or at the subsidiary level, affordable housing, even… it is going well as expected.

What is the outlook on your ROA and ROE? They have slightly deteriorated. Do you think that there will be pressure in the coming quarters?
VP Nandakumar: Our ROE expectation has been fully met last year and this year also we expect the same with a CAGR of 20% and 20% ROE, that has been the guidance to the previous year also. We met that, almost we achieved that. This year we are also very positive about that. In terms of your asset quality, will that remain below the 2% mark going forward?
VP Nandakumar: Yes, it will be because of this, we are right on that path.And what about your gold loans? Any updates as to what is happening? There was RBI’s cap on disbursals of more than Rs 20,000 in cash. Any reluctance from borrowers? Is that what you are seeing? Has it affected your gold loan disbursals in any way?
VP Nandakumar: It is for the entire regulated sector. We have a level playing field even when we introduced that. So, it has not affected the business negatively. We are right on track as far as our guidance is concerned.

Given that there is that limit on how much you can disburse in cash, any increase in the turnaround time in the loans that you can disburse?
VP Nandakumar: Already around more than 60% of our loans were online gold loans, so that is not affected. Below 20,000 is around 10%. So, the change is only in the case of 27% of the customers. In that also, the turnaround time may not be that much – around 5 to 10 minutes, but they come for the second time. It is not a difficult thing. Everything is already there in the system. So, overall, the impact is minimal.