Shares of Indian gold loan finance company Manappuram Finance rose 6% on Thursday, a day after the country’s central bank lifted restrictions on the company’s unit.
In October, the Reserve Bank of India (RBI) had barred four non-banking financial companies (NBFCs), including Manappuram unit Asirvad Micro Finance, from issuing loans due to “usurious” pricing and high margins. .
The central bank lifted the restrictions with immediate effect on Wednesday, saying the companies had taken corrective measures and submitted compliance reports, thereby satisfying the regulator.
Manappuram shares fell 21% to their lowest level in more than a year following the ban, but recovered to pre-ban levels in December. They were up 5% at 9:21 a.m. IST.
-“The lifting of the ban was widely expected and is reflected in the recent rebound in Manappuram’s share price to pre-ban levels,” said Jefferies, which raised the price target from 167 to 190 rupees, while retaining the “hold” rating.
The stock is rated “buy” on average, with a median price target of Rs 187.50, up from Rs 180 a month ago.
Manappuram’s valuation looks attractive, but short-term earnings decline due to microfinance portfolio stress may weigh on valuations, the brokerage said.
