Manappuram Finance: Making Gold Productive, Delivering Strong ROE

Rohit Chauhan presented his in-depth investment thesis on Manappuram Finance (NSE: MANAPPURAM) at Asian Investing Summit 2018.

Thesis summary:

Manappuram Finance is the second-largest gold loan company in India, with a twenty-year history of growing profitably. The company makes short-term loans to low-income borrowers, with gold acting as the collateral. The company has grown 30+% annually over the last ten years and has earned ROEs of 20+%, with minimal loan losses. The company continues to gain share in this unorganized sector and has additional growth drivers in the form of new products, such as vehicle loans, home loans, and micro finance. The company should be able to maintain the past level of growth and profitability due to the large market opportunity and a strong competitive position in the gold loan business. Despite above-average profitability and growth, the company continues to sell at 12x earnings, compared to >20x earnings for comparable financial services firms. The stock has upside potential as growth continues and the valuation discount narrows.

Read Rohit’s related article on making gold “productive”.

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About the instructor:

Rohit Chauhan is an Engineer / MBA with 20+ years of experience in different functions in large corporations in India and abroad. Rohit was introduced to the Investment world in the mid-90s when he started managing his family’s Finances. He learnt the basics by reading financial newspapers and books, and from his mistakes in the early days. Rohit’s approach towards investing changed when he came across the book ‘The Warren Buffett Way’. He got interested in Value Investing and started reading books from legendary investors like Benjamin Graham, Philip Fisher and other greats in this field. Their teachings have formed the bedrock of his investment philosophy. Over the years, Rohit has also learnt to apply the behavioural aspects of investing to his process. Rohit has followed the ‘Value Investing’ philosophy for the last 15+ years in managing his capital.