High demand and market competition fuel Manappuram Finance’s 10% gold loan growth target, says MD VP Nandakumar

Interest rates are unlikely to stay at this level for long. If inflation falls to the RBI target, we are sure to see a repo rate cut at some point and which will benefit the cost of funds.

Our loan ticket sizes are small, and duration is not very high either, which ensures that customers are not unduly burdened. Moreover, if a customer goes to a bank, the turnaround time will be much higher, resulting in a loss of a day’s income. Also, in the case of non-gold verticals that were established more recently, we will see opex to AUM declining in the future as we reap the benefits of high expenses incurred during earlier years.

Gold loans are products that will see customer demand based on their requirements. Customer behavioural patterns are dynamic and vary from time to time. We are not seeing any significant change in the redemption pattern.

In India, campaigning in vernacular mode assumes significance if the rural and semi-urban demand is to be successfully tapped. Doorstep gold loan is a versatile product that allows the customer to avail of a loan from the comfort of his home. A significant market share is now with the unorganized segment, and such advertising campaigns are helpful in creating much-needed customer awareness about the advantages offered by us.

One of the major reasons the organized sector’s share remains low is the lack of adequate financial literacy, which we intend to fix through such campaigns. For this, we use different modes, such as radio and social media, in addition to, print and TV, to reach all segments.

Our growth story is broad-based, as most business verticals have contributed to the same. Our microfinance book, for instance, registered a growth rate of 18.3 per cent, with its assets under management almost touching ₹12,000 crore at the end of FY24. Vehicle finance and home loans have also been big contributors. The housing loan portfolio grew by 37.8 per cent, and the commercial vehicle finance book registered a growth of 69 per cent. These two verticals are expected to show greater promise in the future due to a significant government push towards capex and affordable housing.

In the interim Union Budget, the allocation for PM Awas Yojana  was ₹80,000 crore. The new government has announced that three crore additional homes will be built in this category. Meanwhile, the gold loan AUM growth of 9 per cent is creditable, considering the competition in this space. The broad-based growth can be largely attributed to our diversification strategy.

We are targeting an AUM growth of 20 per cent in MAFIL (Manappuram Finance Ltd) book. The IPO proceeds will ensure that the micro finance subsidiary Asirvad, continues on an expansion path. We are constantly exploring opportunities to expand into newer geographies and are assessing the potential of our sphere of operations very carefully.

Our CV and home finance portfolios have huge potential due to significant government push towards capex and affordable housing. We are targeting a growth of 10 per cent in the gold loan book, taking into account factors like demand and competitive intensity in this space. Our newly created non-gold verticals have immense potential as the economy is steadily growing.

We regularly assess the opportunities and potential in the microfinance industry and evolve suitable strategies from time to time. The IPO is expected shortly, and merchant bankers are studying the market conditions to determine  when exactly to go for it.