Manappuram Finance's Share Price Soars, Stock Reaches Near 6% After Bain Capital Investment

Manappuram Finance, one of India's leading non-banking financial companies (NBFC), specialising in gold loans, microfinance, and various other financial services, saw its share price rise near 6% during morning trade on BSE on Friday, March 21. This surge followed the announcement that Bain Capital would invest ₹4,385 crore to acquire a 26% stake and take joint control of the Kerala-based company.

Share Price Movement

The stock opened at ₹226.50, higher than its previous closing price of ₹217.50, and surged by over 5.8% to ₹228.60. This marked a near-52-week high, just shy of ₹230.25, the highest level reached on July 19, 2024. However, by 9:45 AM, the stock pared some of its gains, trading 2.23% higher at ₹222.35.

At 11:14 AM, on BSE, the share price was Rs 230.20, up 5.84 per cent.

Why Is Manappuram Finance's Share Price Rising?

Bain Capital, a US-based private investment firm, has committed ₹5,764 crore to acquire a 26% stake in Manappuram Finance, granting them joint control of the company. This announcement has sparked significant investor interest.

Elara Capital noted that Bain's investment signals a turning point for Manappuram, the second-largest player in India's gold financing sector. According to Elara, the investment could catalyze a re-rating of the company's valuation, as it marks the end of long-standing overhangs and boosts investor confidence regarding Manappuram's future growth and governance.

Manappuram Finance Share Price Performance

Manappuram Finance has been on a positive trajectory, with its stock price rising for 12 consecutive sessions, including today. At ₹228.60, the stock has gained 21% year-to-date, despite a generally weak market sentiment. The stock hit a 52-week low of ₹138.40 on October 23, 2024, and has since surged by 65% from that low. As of 11:14 AM, the share price stood at ₹230.20, reflecting a 5.84% increase.

Historical Performance of Manappuram Finance's share

Over the past week, the stock has gained 9%, and in the 3- and 6-month periods, it has risen by 24% and 10%, respectively. Over the past three years, the stock has surged by 94%, while it has gained 132% over the last five years.

What Should Investors Do with Manappuram Finance's Stock?

Following Bain Capital's investment, several brokerage firms have upgraded their ratings for Manappuram Finance. Despite this, analysts caution that the company must address its structural issues and tackle competitive challenges.

Elara Capital, for example, upgraded its rating from "reduce" to "accumulate" with a target price of ₹250. This suggests an upside potential of 15% from the stock's previous close of ₹217.50. Elara Capital emphasized that Bain Capital's acquisition of a controlling stake in Manappuram Finance is a significant development for the company, potentially revitalizing its position in the gold financing market.

About Bain Capital

Bain Capital, founded in 1984, is a leading private investment firm based in Boston, Massachusetts. With a global presence, Bain Capital manages approximately $185 billion in assets across five primary areas: private equity, growth and venture, capital solutions, credit and capital markets, and real assets. The firm operates in 25 offices across four continents, leveraging deep sector expertise and extensive capabilities.