Manappuram Fin loses shine

Manappuram Finance is a big loser on the BSE today. The stock is currently down 10% at Rs.24.95 and its 52-week low stands at Rs.18.60.

The stock has taken a big beating after the company put up an update on its operations and it has guided a net loss of Rs.50 crore for Q4FY13. This is a sharp roundabout from the Rs.90 crore net profit it had guided. This loss, as per the company would be mainly on account of the sharp fall in gold prices since the past two months and more importantly, it would need to make an interest income reversal of Rs.250 crore. If one may recollect, in Q3FY13 too, the company had booked an interest income reversal of Rs.39 crore on loans to the tune of Rs.1500 crore and this had hit its Q3 net profit.

The company has stated that it would be able to recover Rs.1750 crore of loans by selling pledged gold but if gold prices continue to decline, it could see a drop of another Rs.100 crore in the balance e sheet.