Manappuram Finance’s shares experienced a significant surge of over 13% on the National Stock Exchange (NSE) on Friday. This remarkable jump came right after Bain Capital, a leading global private equity firm, revealed plans to invest ₹4,385 crore for an 18% stake in the company, aiming for joint control through a mandatory open offer.
Stock Performance and Market Reaction
The stock of Manappuram Finance, recognized as India’s second-largest gold loan non-banking financial company (NBFC), opened at ₹226, marking an increase from the previous day’s close of ₹217.50. During trading, the share price soared to a new 52-week peak of ₹247.60 before settling at ₹234.40, closely aligning with Bain Capital’s acquisition price.
- Opening Price: ₹226
- Day’s High: ₹247.60
- Closing Price: ₹234.40
Bain Capital’s Strategic Investment
On Thursday, the Kerala-based company announced that Bain Capital’s affiliates—BC Asia Investments XXV and BC Asia Investments XIV—will acquire 93 million shares at an average price of ₹236 each. This price represents a 30% premium over the six-month trading average. Additionally, Bain’s acquisition triggers an open offer to purchase an extra 26% stake at the same price of ₹236 per share.
In light of this announcement, several financial institutions adjusted their ratings and target prices for Manappuram Finance. Motilal Oswal Financial Services upheld a ‘Neutral’ rating but increased its target price to ₹240, emphasizing that the stock’s valuation remains appealing, trading at 7x FY27 price-to-earnings.
Positive Outlook for Manappuram Finance
Motilal Oswal noted that Bain Capital’s involvement would provide critical strategic direction and expertise to help propel the company’s future growth. After the investment, Bain’s stake in Manappuram is expected to range between 18.0% and 41.7%, depending on the open offer’s response. Currently, promoters VP Nandakumar and Sushama Nandakumar collectively hold 34.72% of the company, which will reduce to 28.9% post-transaction.
The financial firm highlighted the importance of bringing in a professional CEO for Manappuram, which could enhance succession planning and strengthen the senior management team.
Analyst Upgrades Reflecting Confidence
Elara Securities described this deal as a pivotal moment for Manappuram Finance. They upgraded their rating from ‘Reduce’ to ‘Accumulate’ and set a new target price of ₹250, up from ₹185. Meanwhile, IDBI Capital also revised their rating to ‘Buy’, raising their target price from ₹200 to ₹252. They believe that Bain Capital’s strategic support could lead to a revival of Manappuram’s business, especially in the gold loan sector, despite ongoing challenges in its microfinance segment.
In summary, the infusion of capital and expertise from Bain Capital signals a promising future for Manappuram Finance, potentially revitalizing its operations and market position in the coming years.
