India`s Manappuram Finance surges after central bank lifts ban on unit
Shares of Indian gold loan financier Manappuram Finance rose as much as 6% on Thursday, a day after the country's central bank removed restrictions imposed on the company's unit.
The Reserve Bank of India (RBI) had in October barred four non-banking financial companies (NBFCs), which included Manappuram's unit Asirvad Micro Finance, from issuing loans due to "usurious" pricing and high markups.
The central bank removed these restrictions with immediate effect on Wednesday, saying the companies initiated remedial measures and submitted compliance reports, satisfying the regulator.
Manappuram's shares had fallen 21% to a more than one-year low following the ban, but recovered to pre-ban levels in December. They were last trading up 5% at 9:21 a.m IST.
"Removal of ban was largely expected and reflected in recent rebound in Manappuram's share price to pre-ban levels," Jefferies said, raising price target to 190 rupees from 167 rupees while keeping "hold" rating.
The stock is "buy" rated on average, with a median price target of 187.50 rupees, up from 180 rupees a month ago.
Manappuram's valuation seems attractive, but near-term earnings drag due to stress in microfinance portfolio can weigh on valuations, the brokerage said.r
