Manappuram Finance logo.
Credit: X/@ManappuramMAFIL
Bengaluru: India's Manappuram Finance Ltd on Monday reported a bigger-than-expected rise in second-quarter profit, aided by strong demand for loans.
The gold financing company's consolidated net profit rose nearly 37 per cent to 5.58 billion rupees ($67.01 million) for the quarter ended Sept. 30, beating analyst expectations of 4.98 billion rupees, according to LSEG data.
Gold prices hit a record high earlier this year and though it saw some subsequent corrections, prices were up more than 20 per cent year-on-year for the quarter.
Rise in gold prices benefits gold financiers as more customers pledge the yellow metal as collateral for loans, aiding growth.
Manappuram's interest income rose over 27 per cent to 20.44 billion rupees.
The Kerala-based company's revenue from its gold loan business, which accounts for about three-fourths of its topline, rose 18.5 per cent to 15.37 billion rupees, while its micro-finance arm posted a 53 per cent revenue growth.
The company's finance cost, however, rose more than 30 per cent due to a high interest rate environment, pushing up total expenses by 23 per cent.
India's central bank has hiked rates by 250 basis points since May 2022 in a bid to cool surging prices.
Last week, larger rival Muthoot Finance posted a near-15 per cent rise in quarterly profit but missed estimates on higher finance costs.
The profit beat comes after an Indian court, in August, quashed a money laundering case against the company's CEO, V P Nandakumar, that was brought by the country's financial crime-fighting agency in which Nandakumar's personal assets, including shares in Manappuram Finance, were frozen.
Manappuram's shares closed 4.7 per cent higher after the results.
($1 = 83.2764 Indian rupees)