Manappuram Finance Shares Jump 6% On Bain Capital’s Rs 4,385 Crore Stake Acquisition; Should You Invest? – News18
Last Updated:
Upon completion of the transaction and a mandatory open offer, Bain Capital will be classified as a joint promoter
Manappuram Finance Shares
Manappuram Finance Share Price: Manappuram Finance Shares Surged 6% in Morning Trade on BSE after the company announced a Rs 4,385 crore investment deal with Bain Capital Asia. Under the deal, the private equity firm will acquire an 18% stake via a preferential allotment of equity shares and warrants.
Upon completion of the transaction and a mandatory open offer, Bain Capital will be classified as a joint promoter alongside the existing promoters, V.P. Nandakumar and Sushama Nandakumar.
According to a company filing on March 20, Bain Capital, through its investment arm BC Asia Investments XXV Limited, will acquire 9.29 crore equity shares at Rs 236 per share. An equal number of warrants will be issued to BC Asia Investments XIV Limited at the same price, each warrant being convertible into one equity share.
The conversion option can be exercised in one or more tranches between four and 18 months from the allotment date. The transaction is subject to shareholder approval and regulatory clearances from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI).
As part of the deal, Bain Capital will have the right to appoint a director to the board of Manappuram Finance, granting it joint control of the non-banking financial company (NBFC).
The deal will also trigger a mandatory open offer for an additional 26% stake in Manappuram Finance, which could potentially increase Bain Capital’s holding to over 40%.
Following the transaction, the existing promoters will retain a 28.9% stake in the company.
In a separate move, the board of Manappuram Finance has approved an agreement with V.P. Nandakumar and Manappuram Asset Finance Limited (MAFL) to acquire a 99.917% stake in MAFL, a non-deposit-taking NBFC.
Manappuram Finance has scheduled an Extraordinary General Meeting (EGM) on April 16, 2025, to seek shareholder approval for the preferential allotment and related amendments to its Articles of Association.
Manappuram Finance Share Price Trend
The stock of Manappuram Finance has been on a strong upward trajectory, marking its 12th consecutive session of gains, including today. Currently priced at Rs 228.60, the stock has risen by 21% this year, defying the prevailing weak market sentiment.
Manappuram Finance: What Should Investors Do?
Following Bain Capital’s acquisition of a controlling stake, some brokerages have upgraded the stock. However, analysts caution that the company needs to address its structural challenges and competitive pressures.
Elara Capital has upgraded its rating on Manappuram Finance from “reduce” to “accumulate,” with a target price of Rs 250. This suggests a potential upside of 15% from the stock’s previous closing price of Rs 217.50.
Elara notes that the announcement of Bain Capital’s investment marks a significant turning point for the company, the second-largest player in gold financing. The firm sees this move as a catalyst for a potential re-rating of Manappuram Finance, boosting investor confidence in its growth and governance prospects. However, Elara also highlights that a substantial valuation gap remains compared to the market leader, Muthoot Finance. Manappuram Finance’s current P/ABV ratio stands at 1.1 times, while Muthoot Finance’s is 2.4 times for FY27E, indicating that the gap may not narrow significantly unless the company addresses its structural issues.
Elara believes the full impact of Bain’s investment will unfold over the next two to three quarters, with the company likely undergoing a restructuring phase. They have revised their valuation multiple to 1.3 times FY27E P/ABV, anticipating continued improvements by FY26.
Despite the recent rally, some experts remain cautious. Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, points out that Manappuram Finance has surged by nearly 30% over the past two months and is nearing a key resistance zone around Rs 220-Rs 225. This area aligns with a previous high from June 2024, making it critical for potential profit-booking.
Patel recommends booking profits near the resistance zone and waiting for a healthy pullback before reassessing new positions for a more favorable risk-reward setup.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
