Man Appu Ram

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Team Singularity

Digvijay D Jadhav
Karan Ralhan
Basheer Salma
Company Overview
Porter’s 5 forces framework

Threat of Bargaining power


new entrants of suppliers

• Low Barriers to • Low concentration


Entry (rural areas,
• Retaliation Industry common people)
• Low to moderate attractiveness: • High Concentration
threat of new Low to (Corporates)
entrant moderate

Threat of Bargaining power


substitutes of customers

• Banks, Instant • Low switching costs


money lending app • High differentiation
• Low to Moderate • Moderate to high
switching cost Competitive rivalry bargaining power of
• Moderate to high customer
thereat of substitutes • High concentration
• High competitive rivalry
Financial Analysis

ROE (%) • In FY-21, Total Debt/Equity Net Profit Margin


30 reduced, even though NPR 30

25
increased 25

20
• NPR, EPS rose during FY-21 20

15
(because of increased loans 15

10 10
due to job loss in pandemic).
5 5

0 0
Mar-22 Mar-21 Mar-20 Mar-19 Mar-18 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18

Total Debt/Equity Quick Ratio Basic EPS (Rs.)


3 25
4.5
4 2.5
20
3.5
2
3
15
2.5 1.5
2 10
1
1.5
1 0.5 5
0.5
0 0
0 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18 Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Mar-22 Mar-21 Mar-20 Mar-19 Mar-18
Financial Analysis
Revenue EPS
7,000 25

6,000
20
5,000

4,000
15 • Constantly growing revenue and
3,000
advances
10
• Collections took a hit with strict
2,000
CAGR= 12.1%
5
lockdowns in COVID Waves.
1,000 • Company has a healthy Return on
- 0 Equity (ROE) track record of
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
16.6%.
Advances EV/EBIDTA • The company has been
maintaining a healthy ROCE of
35000.00 12
14.85% since last 3 years.
30000.00 10

25000.00
8
20000.00
CAGR= 6
15000.00 12.1%
4
10000.00

5000.00 2

0.00 0
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Peer Comparison
EV / EBIDTA P/E RATIO
16

Manappuran has a 14
12
Industry Average

higher ROE % as 10
8 Bengal & Assam
compared to most of 6
4
Manappuram Finance

its peers (also more 2


0
Muthoot Finance

than the industry l di


ng
s
i na
nc
e
i na
nc
e
a nc
ia
l
i na
nc
e
As
sa
m
er
ag
e Shriram Finance

Ho F F in F Av L&T Finance Holdings


average). in
an
ce
hrir
am
utho
ot
l w
e iss
F
pur
am
en
ga
l&
dust
ry
Edelweiss Financial
F S M e ap B In
T Ed an
L& M 0 5 10 15 20 25 30 35

EPS (INR.) ROE (%)


Manappuram’s P/E 700
Ratio, EPS value,
Industry Average
600

and EV/EBIDTA are 500


400 Edelweiss Financial
also on the lower side 300
L&T Finance Holdings

as compared to its 200


100 Bengal & Assam

peers and the 0


l
Shriram Finance
m ce ce cegs ia ge
industry. &
A s sa
F in
ot
an
F Fin
an
Ho
in
l an
din
sF
in
a nc
ry
Av
e ra
Manappuram Finance
g al ra m
ho ra m
nce
i s st
n ri ut pu na e du Muthoot Finance
Be Sh M ap Fi el
w In
a n T E d
M L& 0 5 10 15 20 25
Excess Return Model
Q2 FY23 P&L Balance
Report Statement Debt / Equity Sheet

Discount
Rate/ Cost of
Book Value Equity 5 year Gov
ROE Risk Free
Per Share Bonds
Rate (RBI)

Unlevered S&P
Excess returns
Beta Global
per share

Aswath
Value of equity Equity Risk Damodaran
Premium (NYU)
Excess Return Model
Valuation Model (Excess Returns Model)
Return On Equity 16.6%
Excess Return Model-
• The value of a firm can be Stable EPS ₹ 20.93
Book Value of Equity per Share ₹ 126.09
written as the sum of capital
Perpetual Growth Rate 6.80%
invested currently in the firm
Risk-Free Rate 6.79%
and the present value of excess
Equity Risk Premium 8.40%
returns that the firm expects to
Consumer Finance Unlevered Beta 0.8
make in the future.
Re-levered Beta 1.87
• Used for finance firms where
Levered Beta 1.87
free cash flow is difficult to Discount Rate/ Cost of Equity 22.51%
estimate Excess Returns ₹ -7.46

Terminal Value of Excess Returns ₹ -47.41


Value of Equity ₹ 78.68
Microsoft Excel Value per share (INR) ₹ 78.68
Worksheet Current Share Price ₹ 119.05
Current discount -51.31%
DCF and EV/EBITDA Model
DCF
GDP growth of • RBI
FCFE & Share
India EV Value

P/EBITDA
NBFC sector Share
• RBI EV
growth Value

Manappuram’s • Company’s P/E Share


deposits and market share is EV
increasing (used Value
advances liner regression)

Revenue, P&L P/B Share


and Balance EV
sheet Value
projections
DCF and EV/EBITDA Model

Valuation - Summary Microsoft Excel


Worksheet

Equity Minority Adj. Equity


EV Net Debt Share Value Weight
Value Interest Value
Valuation Methods
A B C=A-B D E = C - D F = E/No. of B
shares
Discounted Cash Flow 50%
35,596 25,108 10,488 87 10,401 123
EV/EBITDA 50%
36,688 25,108 11,580 87 11,493 136
P/E 0%
51,749 25,108 26,641 87 26,554 314
P/S 0%
42,685 25,108 17,577 87 17,490 207
P/B 43,361 25,108 18,252 87 18,165 215 0%

       
36,142 10,947 129  
Stock Recommendation

• The stock is trading at a current P/E ratio of 8.07


and the average historical P/E for the last 5 years
was 9.59.
• The P/E ratio is currently lesser than the industry
average of 14.6%.
• The P/B ratio of 1.11 is currently lesser than the
industry average of 1.48.
• The stock is being traded close to 52- week low
price.
• Company has a diversified portfolio and a high
ROE %.
• So, our recommendation is to buy the stock.
References

1. https://www.moneycontrol.com/stocks/company_info/print_main.php
2. https://www.moneycontrol.com/financials/manappuramfinance/balance-sheetVI/MGF01/1#MGF01
3. https://www.owler.com/company/manappuram
4. https://www.manappuram.com/
5. https://simplehai.axisdirect.in/peercomparison/nse/Manappuram-Finance-Ltd-6083
6. https://ticker.finology.in/company/MANAPPURAM
7. https://www.indiainfoline.com/company/manappuram-finance-ltd/peer-comparison/6083
8. https://m.rbi.org.in/scripts/PublicationsView.aspx?id=20946

Microsoft Excel
Worksheet
Team Singularity

Thank You Contact no: 7776005604


Email: digvijay.jadhav22-01@iimv.ac.in

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