Shares of Manappuram Finance rallied over 4 per cent on March 24 and hit an intraday high of Rs 243.75 as the stock continues to witness heavy trading volumes. Shares of the NBFC firm have rallied nearly 22 per cent in eight consecutive sessions.
The stock gained significantly after brokerages issued bullish signals following the company’s Rs 4,400 crore deal with Bain Capital. Manappuram Finance had recently announced that Bain Capital will acquire 18 per cent stake in the company for the said amount. The company’s shares surged significantly following this announcement and hit an all-time high of Rs 247.6.
Axis Securities noted that the stock price rally on Friday was accompanied by a sharp decline in open interest for the stock. It predicted, “The sharp decline in price appreciation and open interest suggests a large amount of short squeeze amid positive news flow, indicating the possibility of a sustained rise in price in the near future.”
ICICI Securities maintained a ‘buy’ rating on the stock with a target price of Rs 260 per share. Meanwhile, Motilal Oswal maintained a ‘neutral’ rating on Manappuram Finance shares with a target price of Rs 240 per share. IDBI Capital Markets, however, raised its rating for the stock to ‘buy’ and its new target price to Rs 252 (from its earlier target price of Rs 200). IDBI Capital said it believes Manappuram can regain some lost ground in the gold loan industry while navigating challenges in the microfinance business.
Elara Securities called the deal a turning point for India’s second-largest gold loan provider. The brokerage upgraded the stock to ‘accumulate’ from ‘reduce’, citing possibility of valuation re-rating and raised the target price to Rs 250 per share from Rs 185 per share earlier.
