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Manba Finance Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤2nd Feb 26

Summary : Manba Finance demonstrates robust growth, stable asset quality, and strategic expansion into new products and partnerships, driving future profitability.

Management Perspective positive : Management expressed confidence in delivering 'sustainable and profitable growth' and highlighted 'robust growth' across all five quarters since listing. They are 'constantly growing company' and expect further reduction in borrowing costs.

Concall Report Analysis & Insights

Business Overview

  1. Manba Finance is an NBFC offering loans for two-wheelers, three-wheelers, used cars, and small businesses.
  2. Operates in 113 locations across 6 states with over 1400 dealers and 1700 employees.
  3. Asset Under Management (AUM) grew 25% year-on-year to Rs. 1,631 crores as of December 31, 2025.
  4. Q3 FY26 profit after tax was Rs. 13 crores, with 9-month PAT at Rs. 34 crores, up 15% YoY.
  5. Portfolio is over 95% secured, with two-wheelers comprising 85.91% of the product mix.

Future Growth Prospects

  1. Entered a strategic MoU with TVS Motor Company to enhance three-wheeler financing reach.
  2. Launching a new MSME LAP product in February, starting in Mumbai and Pune.
  3. Targeting 25-30% year-on-year growth in AUM.
  4. Focusing on deeper penetration in existing states like Uttar Pradesh and Madhya Pradesh.
  5. Expects to achieve Rs. 65-70 crore PAT for FY27 with ROA of 3.25-3.5% and ROE of 14-15%.

Management Insights

  1. Q3 reflects strength and resilience with healthy AUM growth, stable asset quality, and strong liquidity.
  2. Net interest income grew 17% YoY in Q3, supported by steady loan growth and funding efficiencies.
  3. Gross NPA stood at 3.38% and net NPA at 2.57%, with credit costs below 1%.
  4. Capital adequacy ratio is healthy at 25.06%, providing headroom for future growth.
  5. Average cost of borrowing has reduced to 10.12% and is expected to decrease further.

Signs of Skepticism

  1. Analyst initially questioned why finance cost increased quarter-on-quarter despite borrowing reduction, requiring clarification from management.

Risk Factors

  1. Collection issues observed in EV three-wheeler passenger vehicles from local manufacturers.
  2. High competition in the used four-wheeler segment impacting growth.
  3. Market conditions could affect the timing of future equity fundraising.

Good To Know

  1. Secured funding from 3 public sector banks, 10 private sector banks, and 23 NBFCs.
  2. Credit profile supported by CARE rating BBB+ (positive outlook) and ACUITE rating A-.
  3. Total live customer base has grown to over 2 lakhs.
  4. Company aims to keep leverage at 4-4.25 times, planning new capital raise when reached.

Key Drivers

  1. New MSME LAP product launch.
  2. TVS Motor partnership expansion.
  3. Decreasing borrowing costs.
  4. Deeper penetration in key states.

Key Analyst Discussions

Competitive Environment

  1. Used two-wheeler segment has limited organized competition, with IDFC and WheelsEMI noted.
  2. Used four-wheeler market is highly competitive, leading to plans for co-lending partnerships.
  3. Commercial vehicle financing is a different product segment not currently in focus.

Market Trends & Consumer Behavior

  1. Festive demand significantly contributed to the season's highest disbursement in Q3.

Financial Highlights

  1. Borrowing costs decreased from 10.80% to 10.12%, with further reductions expected.
  2. Q3 finance cost increase was attributed to major Q2 borrowings for seasonal Q3 business.
  3. Management targets FY27 ROA of 3.25-3.5% and ROE of 14-15%.
  4. Q3 profit not increasing proportionately due to income from seasonal disbursements starting in January.

Product Composition

  1. Launching MSME LAP with loan amounts from Rs. 5 lakh to Rs. 20 lakh.
  2. Gradually increasing focus on used two-wheelers, aiming for up to 10% of the portfolio.
  3. EV loans constitute 7-9% of the portfolio, with two-wheeler EVs performing better than three-wheeler EVs.

Strategic Considerations

  1. Expanding deeper into existing states like UP and MP rather than adding new states.
  2. Underwriting in new states restricts LTV to 75% to manage NPA risk.
  3. Strategic MoU with TVS Motor targets Rs. 250-300 crores disbursement in 18-24 months.
  4. Business corresponding partnerships contribute to profitability with low OPEX and no credit loss.
Manba Finance Ltd (MANBA) Concall Report Analysis & Insights | Dhanarthi