Shares of Kerala-based Manappuram Finance ended 12% lower on Wednesday after the Enforcement Directorate searched the office premises of the gold loan company earlier in the day. The non-bank lender’s stock saw its biggest single-day fall in the past two years. It ended the day at one-and-a-half-month low of 113.80 on the National Stock Exchange. It fell nearly 14% intra-day, and hit a low of111.60.
“The ED is conducting a search at our registered office. We are extending full cooperation to the department, including providing complete information sought by them,” the company said in an exchange filing.
“As the search is ongoing, we will be able to provide more information on its completion,” it added, clarifying that the company has always adhered to the best practices in corporate governance and compliances. While the filing did not divulge details of the search, news agency PTI reported that the search was being conducted to gather evidence related to allegations of collecting public deposits worth over Rs 150 crore by the company in contravention of the Reserve Bank of India guidelines.
Nevertheless, various brokerage firms remain positive on the lender’s stock. ICICI Securities has maintained its ‘buy’ rating on the lender’s shares, factoring in a strong growth in the non-gold products like microfinance, micro, small and medium-sized enterprises (MSME), and vehicle finance.
Motilal Oswal Financial Services has also maintained a ‘buy’ rating on the company’s stock due to its favourable risk-reward metrics. Going ahead, analysts will eye the March quarter results, which will be declared on May 12.