Manappuram Finance’s shares tumbled nearly 3% on August 11, after the NBFC reported a steep 75% year-on-year decline in its Q1 FY26 net profit to ₹138 crore from ₹555 crore a year earlier. Revenue from operations dropped 9% to ₹2,262 crore, as microfinance continues to weigh heavily on its performance. 

Segmental Performance: Gold Strong, Microfinance Falters

The gold loan segment boosted revenue 10% YoY to ₹1,904 crore, benefitting from elevated bullion prices—a bright spot in an otherwise dismal quarter (Economic Times, Reuters). However, the microfinance business recorded a drastic 53–54% sales collapse to around ₹361 crore, signaling deeper stress in that portfolio.

Provisions in the microfinance unit nearly tripled to ₹483 crore—forming the bulk of total provisions of ₹559 crore—reflecting heightened loan defaults and asset-quality stress in the unsecured microfinance segment. 

Consequently, net interest income shrank sharply by 14.2% to ₹1,407 crore, and assets under management dipped 1.4% to ₹44,304 crore. This downturn disproportionately impacted the company’s bottom line.

Brokerage Commentary: Cautious Optimism, Eyes Turnaround by Q4

Brokerages maintained a cautious stance following the results.

• Jefferies held a “Hold” rating while raising its target to ₹275. The firm noted that although Q1 PAT aligned with expectations, weaker net interest income was offset by lower provisioning, particularly in microfinance. Jefferies cautioned that subdued NIMs, unwinding of non-gold loans, and elevated MFI provisions remain near-term headwinds. Clarity on the turnaround under new leadership will be essential for any re-rating.
• CLSA retained its “Outperform” stance with a target of ₹260. The broker pointed out that both pre-provision operating profit and net profit missed estimates by around 9%, due to unexpected yield and spread contraction. Management’s strategy includes lowering lending rates on high-ticket loans to around 18% over the next 4-6 quarters. Loan growth stood at 13% QoQ, driven by higher ticket sizes but offset by a sharp 23% sequential decline in the Asirvad MFI book. CLSA echoed management’s belief that the worst could now be behind the company, with profitability expected to return by Q4 FY26.

Leadership Changes & Strategic Outlook

Adding to the narrative, Manappuram announced leadership changes: Managing Director V. P. Nandakumar will assume the role of Chairman from August 28, succeeding retiring Independent Director Shailesh Jayantilal Mehta, effective August 27.

Last quarter’s Q4 FY25 results already hinted at stress in the microfinance operations of subsidiary Asirvad Finance, which reported cumulative losses and required fresh leadership focus. The board’s decision on corporate governance and operational overhaul, especially as Bain Capital’s investment nears closure, will be a key catalyst for recovery.

Market Mood & Forward Look

As of August 11, Manappuram’s stock was under pressure amid broader market caution and weak Q1 earnings across sectors.

Looking ahead, analysts believe the company must accomplish two things to regain investor confidence: stabilize asset quality (particularly in microfinance) and deliver visible gains from its strong gold loan business. With management forecasting a return to profitability by Q4 FY26, much will depend on execution of rate cuts, provisioning discipline, and broader lending growth.

If successful, Manappuram could leverage its gold-loan leadership and restructuring momentum to stage a recovery—potentially unlocking upside in investor sentiment over the coming quarters.