Manappuram Finance Shares Crash 15% After RBI Restrictions

Shares of gold finance company Manappuram Finance were in focus during Friday (October 18) trading session as they experienced a significant drop. The company’s shares fell by 17%, hitting a low of Rs 147.50, marking an 11-month low. The decline is attributed to action taken by the Reserve Bank of India (RBI). 

The RBI has imposed a ban on the company’s subsidiary, Ashirwad Micro Finance, preventing it from disbursing loans. As a result, several brokerage firms have downgraded their ratings on Manappuram Finance Limited and reduced the target price for its stock.

Also Read | Who Will Execute Ratan Tata’s Will? Meet 4 Trusted Individuals with the Right to Share His Wealth.

Along with Ashirwad Micro Finance Ltd, other Non-Banking Financial Companies (NBFCs) affected by the RBI’s decision include Bangalore-based Navi Finserv Ltd, New Delhi-based DMI Finance Pvt Ltd, and Kolkata-based Rohan Financial Services Ltd. The RBI has ordered these companies to halt the disbursement of loans, citing non-compliance with the Fair Practices Code.

Following the RBI’s action, Morgan Stanley has lowered its target price for Manappuram Finance to Rs 170. Jefferies downgraded the stock to a 'Hold' rating and reduced the target price to Rs 167. Meanwhile, brokerage firm CLSA has maintained its 'Outperform' rating on the stock but reduced the target price from Rs 240 to Rs 200.

#MANAPPURAM

Immediate board meeting for RBI compliance actions. pic.twitter.com/s8xkpGyPcA

— Ravinder Singh (@ravibhaumiriya) October 18, 2024

Among the 18 analysts covering Manappuram Finance, 12 still maintain a 'Buy' rating, four have assigned a 'Hold' rating, and two have issued a 'Sell' recommendation.