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.
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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.
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.