Manappuram Finance Q1 profit soars 320% as lower provisions, microfinance turnaround boost earnings
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Manappuram Finance reported a sharp surge in consolidated profit attributable to owners for the June quarter, with earnings rising 322.4% year-on-year to ₹584.58 crore, even as revenue from operations grew a more modest 34.1% to ₹3,034.16 crore.
The divergence between revenue and profit growth was largely driven by a sharp reduction in impairment charges and a major improvement in the company's microfinance business.
Lower impairment charges drive profit growth
Manappuram's total expenses rose just 4.4% year-on-year to ₹2,258.51 crore in Q1 FY27, substantially slower than the 34% growth in revenue.
The biggest swing came from impairment on financial instruments, which fell to ₹225.47 crore from ₹572.36 crore a year earlier — a decline of nearly 61%, or about ₹347 crore.
As a result, profit before tax jumped to ₹781.82 crore from ₹101.52 crore in the year-ago quarter. Profit for the period stood at ₹584.77 crore, compared with ₹132.47 crore a year earlier.
The improvement came despite a sharp rise in funding costs. Finance costs increased 49% to ₹1,273.96 crore from ₹855.28 crore in Q1 FY26. Employee benefit expenses rose to ₹496.93 crore from ₹461.42 crore, while other expenses declined to ₹167.70 crore from ₹178 crore.
Microfinance business stages major turnaround
Another important factor behind the earnings improvement was the performance of Manappuram's microfinance segment.
The group has two reportable segments — gold loan and others, and microfinance.
The microfinance business, which had been a major drag on profitability in the year-ago period, staged a turnaround during Q1 FY27. The segment swung to a ₹27.70-crore profit before tax, compared with a ₹437.27-crore loss a year earlier—an improvement of nearly ₹465 crore.
The turnaround is important because microfinance revenue actually declined 12.7% to ₹315.10 crore from ₹360.77 crore a year earlier. The company did not provide a detailed segment-level expense bridge for the sharp improvement in profitability. However, it said Asirvad Micro Finance had initiated corrective measures and was working to restore compliance through the “rebalancing of its loan portfolio.”
Additional ECL provision remains a watchpoint
Despite the sharp year-on-year reduction in impairment charges, Manappuram also disclosed an additional provisioning impact during the quarter.
The group and Manappuram Home Finance revised their Expected Credit Loss (ECL) models, updating assumptions related to probability of default, loss given default, exposure at default and forward-looking macroeconomic assumptions.
The changes resulted in an additional ECL provision of ₹125.25 crore in the consolidated financial results for Q1 FY27.
The company's board also declared an interim dividend of ₹1 per equity share of ₹2 face value, representing a 50% payout on the face value. The record date has been fixed as August 17, 2026.
Ashish Singh to take over as MD and CEO
The company has also announced a leadership transition, with the board appointing Ashish Singh as managing director and CEO for five years from January 1, 2027, subject to shareholder approval. Singh has more than 25 years of experience in retail banking.
Current MD and chairman V.P. Nandakumar will continue in his role until December 31, 2026, after which he will become non-executive chairman.
The board has also proposed raising the company's overall borrowing limit to ₹1 lakh crore, subject to shareholder approval, and declared an interim dividend of ₹1 per share.
Shares of Manappuram Finance ended Tuesday 2.52% lower at ₹360 apiece on the NSE. The stock has surged over 40% over the past year, outperforming the Nifty 500 index, which has gained nearly 5% during the period.