Gold loan major Manappuram Finance made impressive gains in both profitability and AUM in first quarter of FY24 while making steady progress in the non-gold businesses, especially microfinance, helping the company to become a well-diversified NBFC entity. The Kerala-based company has ventured into more non-gold verticals and it believes that growing urbanisation and increasing incomes will help it become profitable in the new verticals. VP Nandakumar, MD & CEO, Manappuram Finance, tells Sajan C Kumar that it will not, however, scale down its gold loan book and expects a 10-% y-o-y growth in gold loan AUM in FY24. Excerpts:
How has been your gold loan portfolio growth in Q1FY24? Has the demand come back after some slowdown and what is your expectation on the gold loan growth for FY24?
Our gold loan portfolio grew by 4.3% sequentially (Q-o-Q) in Q1 FY24 which is quite decent from a quarterly growth perspective. Demand for gold loan is always prevalent and it is not an issue. This is the reason banks and fintech companies are now trying to establish a foothold in this space. Though the same pace of run rate may not be possible every quarter, we expect to close the financial year with a 10-% y-o-y growth rate in gold loan AUM on a conservative basis.
The company’s non-gold loan businesses accounted for a 44% share of its consolidated AUM in the first quarter of FY24. Will the share of non-gold businesses increase in coming quarters?
Yes. The share of non-gold business will increase in the coming quarters as our aim is to achieve a portfolio mix of 50: 50 between gold and non-gold portfolios. Towards this end, we have ventured into more non-gold verticals and the results will be visible in the coming quarters. But this does not mean we will scale down our gold loan book. Rather, we will aim at growing both these broad segments.
Your microfinance arm Asirvad Microfinance closed the first quarter with an AUM growth of 44.6%. What are the growth plans for Asirvad and when is the IPO likely to hit the market?
We are very bullish on the microfinance segment as there is a vast section of the unorganised sector that is not yet fully tapped. The portfolio will continue to grow and we expect a 25-30% annual growth. Preparations for fundraising by different means are afoot. As for the IPO, we will go ahead with it as and when we are ready and the board of directors takes the final decision.
Apart from microfinance business, what are the businesses where the company wants to increase its presence?
We have ventured into many new verticals such as hospital loans/loans for medical professionals, teachers’ loan, credit to retail trade, hotels, food processing industry, mahila micro credit and small business loans. Another focus area for us is the affordable home finance and vehicle segment.
What about the expansion of branches? Immediate fund-raising plans? How has been the new customer acquisition during Q1FY24?
We would like to expand our branches depending on regulatory approval and on the microfinance front, we will be adding more branches. We are adequately capitalised now and liquidity is at a comfortable level. Our total customer count on consolidated basis is 6.1 million for Q1 FY24 and compared with the corresponding figure in the previous quarter, we have 200,000 more. We expect to maintain this momentum going forward.
Has the strategy of diversifying into other sectors to become a well-diversified NBFC been gaining pace? When will you achieve the objective of achieving a 50:50 portfolio mix between gold and the non-gold segments?
We are firmly on track to become a well-diversified NBFC with an equitable 50:50 mix between gold and non-gold portfolios. As mentioned earlier, with this objective, we have diversified into many new and niche verticals where we see a huge potential. Looking at the overall credit penetration in India, it is clear that we have a lot of headroom to expand. Growing urbanisation and increasing incomes will help us become profitable in the new verticals. We do not have a fixed timeframe to achieve the 50:50 balance but we are well on our way towards achieving this target.