Manappuram Finance Navigates Q2 FY26 with Golden Gains and Strategic Shifts

Manappuram Finance Limited, a prominent player in India's financial services sector, has reported a mixed but strategically focused performance for Q2 FY26. The company's consolidated net profit for the quarter surged to INR 217 Crore, a significant increase from INR 132 Crore in Q1 FY26. This uplift was primarily driven by a robust performance in its core gold loan segment and a reduction in losses from its microfinance subsidiary. The overall consolidated Assets Under Management (AUM) stood at INR 45,789 Crore as of September 30, 2025, marking a quarter-on-quarter growth of 3.4%. The company's strategic emphasis on its gold loan portfolio continues to yield positive results, even as its non-gold segments undergo a period of recalibration and consolidation.

The gold loan business remains the primary growth engine, with consolidated Gold Loan AUM reaching INR 31,505 Crore, reflecting a strong 9.4% QoQ and an impressive 29.3% YoY growth. This segment now constitutes 69% of the consolidated AUM, up from 53% in Q2 FY25, underscoring its increasing dominance. The company's operational rigor in managing appraisal, custodial, and valuation risks, coupled with its trusted brand, has been instrumental in this success. However, the non-gold segments, including microfinance (MFI), vehicle and equipment finance (VEF), and MSME, faced challenges. The MFI book declined by 12.5% QoQ to INR 4,848 Crore, with a substantial 56% YoY decrease. Similarly, the overall Non-Gold AUM saw a 7.9% QoQ and 33.1% YoY reduction. These segments also experienced a decline in customer numbers, indicating a need for strategic intervention.

Management has articulated a clear strategic roadmap to address the divergent performance across segments. CEO Deepak Reddy highlighted immediate priorities, including aggressively accelerating the gold loan business through enhanced digital journeys, AI-based security, and co-lending partnerships. For non-gold businesses, the focus is on a 'consolidate to grow' strategy, aiming to improve credit performance and profitability by strengthening collection infrastructure, adopting industry benchmark practices, and optimizing operational efficiency. The company is also investing in organizational effectiveness, talent infusion, and leveraging its subsidiaries, with Asirvad Microfinance showing signs of stabilization. The management aims to maintain gold loan AUM growth at a CAGR of 20-25%, even amidst potential gold price fluctuations, and expects cost of funds reduction to continue for the next two quarters, which will help protect margins.

Manappuram Finance's Q2 FY26 performance underscores a strategic pivot towards strengthening its core competencies while meticulously addressing challenges in other verticals. The company's robust capitalization (CRAR at 28.32%) and diversified funding sources provide a strong foundation for these strategic shifts. With a clear focus on operational rigor, technological integration, and talent development, Manappuram Finance is positioning itself for sustained, profitable growth, aiming to become a financial partner of choice for under-banked customers across their lifecycle. The management's commitment to transparency and disciplined execution reinforces investor confidence in its long-term vision.