Reserve Bank of India (RBI), Monitors the activities of banks and NBFCs and takes immediate action if rules are violated. One such case has come to light. RBI has taken action against some NBFCs. Due to which the stock has crashed. Let us know what is the whole matter?
Why did the stock fall?
A huge decline of 15 percent is being seen in the shares of gold financing company Manappuram Finance. Initially this decline was up to 10 percent, but then gradually it reached 15 percent. Actually, due to the fall in the stock, RBI has banned the company’s subsidiary Asirvad Micro Finance from approving new loans and issuing loans. After this, many brokerage firms have also given downgrade rating on this stock. Along with this, RBI has taken action on three more NBFCs. These NBFCs were not following the rules related to household income and loan liability for microfinance loans.
Brokerage firms have issued new targets on the stock of Manappuram Finance regarding the strictness of RBI on the company’s subsidiary Asirvad Micro Finance.
Morgan Stanley has downgraded Manappuram Finance from Overweight to Equalweight. Also, target price of ₹ 170 per share has been fixed. The brokerage says that the RBI decision will affect the company’s profits in the long term. The brokerage firm has cut consolidated earnings estimates for financial year 2025 by 20%. Also, for the business years 2026 and 2027, this reduction is up to 30%.
brokerage firm Jefferies has downgraded the rating on this stock to Hold and set the price target at ₹ 167 per share. The brokerage firm believes that the company can invest capital in its subsidiary. But this will impact the company’s earnings. The brokerage firm has reduced the EPS estimate for business year 2025-27 by 11% to 19%.
On the other hand, brokerage firm CLSA has maintained outperform view on Manappuram Finance, but reduced the target price to ₹200 per share from ₹240. The brokerage firm wrote in its note that Asirvad’s share in Manappuram Finance’s AUM is about 25 percent. Asirvad’s profit estimates have been cut due to RBI action. In such a situation, its impact will be seen on the company also.