Shares of Manappuram Finance rallied nearly 8 per cent to hit a 52-week high on Friday, after the announcement of Bain Capital acquiring 18 per cent stake in the NBFC.
Bain Capital will invest ₹4,385 crore through its affiliates BC Asia Investments XXV Ltd and BC Asia Investments XIV Ltd to acquire an 18 per cent stake on a fully diluted basis via preferential allotment of equity and warrants at ₹236 per share, which is at a premium of 30 per cent over the six-month average trading price.
Bullish brokerages have upgraded ratings and target prices on Manappuram, enhancing investors’ confidence. Meanwhile, they also stressed the need to monitor execution.
Shweta Daptardar, Vice President, Diversified Financials, Non-Banking Financial Services, Elara Capital, said that the acquisition earmarks a turning point for Manappuram’s journey.
Global brokerage CLSA has given outperform rating on Manappuram at an increased target price of ₹270 from ₹225.
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DAM Capital has raised the target price to ₹255, retaining buy.
Elara Capital has upgraded to accumulate rating on Manappuram from reduce at a target price of ₹250 from ₹185 earlier, citing that the Bain’s acquisition at a significant premium reflects confidence in future growth. It “marks a breakthrough, with a shift towards professional governance, thus potentially catalysing a valuation uplift,” Elara added.
However, the brokerage has refrained from tweaking its estimates stating execution is key and kitchen sinking a possibility.
Motilal Oswal analysts expect that the substantial capital infusion would strengthen Manappuram’s financial position, enhance operational efficiencies and expand footprint across key segments, including gold loans, vehicle finance, MSME lending, and microfinance.
Motilal has maintained neutral rating on the stock at a target price of ₹240 per share.
Another global brokerage Jefferies maintained hold call at an increased target price of ₹235. Morgan Stanley retained equal weight at a target price of ₹180.
The stock traded 7.68 per cent higher on the BSE at ₹234.20 (also its 52-week high) as at 12.35 pm.