Manba Finance Limited (MANBA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Manba Finance Q2 and H1 FY '27 Earnings Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Mayank Mistry from Antique Stockbroking Limited. Thank you, and over to you, sir.

Thank you, [indiscernible]. Good evening, everyone. Welcome to Q2 FY '27 Earnings Conference Call of Manba Finance Limited. On behalf of Antique Stock Broking, I would like to thank the management for giving us the opportunity to host this call. We have with us from the management team, Mr. Manish Shah, Managing Director; and Mr. Jay Mota, the Executive Director and CFO. I'll hand over the call to the management for opening remarks, post which we will open the floor for Q&A. Over to you, sir.

Yes. I'm Manish Shah, Managing Director of Manba Finance Limited. Good afternoon, everyone, and thank you for joining our earnings call today to discuss the performance for the second quarter and first half of the financial year 2027. I would also like to thank Antique Stock Broking for hosting this earnings call. Let me first start by giving a brief overview of the company and operational highlights, followed by which our CFO will brief you on the financial performance for the period under review. Manba Finance Limited is an NBFC offering range of financial solutions, including loans to new 2-wheeler, 3-wheeler, used car, MSME LAP, top-up loan, personal loan, used 2-wheeler loans and battery replacement loans. We are currently operating in 148 locations across 7 states, precisely Maharashtra, Gujarat, Rajasthan, MP, Chhattisgarh, UP and Karnataka. Our distribution network includes over 1,900-plus dealers. We have a total team size of approximately 2,061 employees, out of which more than 1,100-plus employees are a part of sales team. Our internal collection team ensures low NPAs in the industry. The company commands one of the fastest turnaround time for loan sanctioned in the industry with over 60% of our loans sanctioned in 1 minute and 92% loans sanctioned within a day. I'm happy to share that recently, company's credit rating has been upgraded to A- stable from BBB+ positive by CARE ratings, reflecting the sustainable scale in the company's operations with assets under management registering a compounded annual growth rate CAGR of 36.33%, alongside access to incremental funding at a lower cost and expectation of INR 99.99 crores -- around INR 100 crores infusion through preferential issue equity and warrants. Ratings continue to be supported by MFL's experienced management team with established experience in 2-wheeler financing, adequate capitalization levels and adequate profitability parameters. This enhanced credit standing has also supported improving funding efficiency with the average cost of borrowing declined to 10.14%. Moving on the industry landscape, vehicle registration trends point to healthy demand across the auto sector, creating a supportive environment for auto finance. During the second quarter, 2-wheeler registration reached approximately 53 lakh units with August and September both recording their highest ever volumes. 3-wheeler registration crossed 3.9 lakh units, supported by strong demand for electric motors. Importantly, demand continues to be driven by rural as well as Tier 2 and Tier 3 markets, which are key focus area for Manba Finance. The momentum was further reflected in September when FADA reported record vehicle [retail] registration of 25.37 lakh units, up by 32% year-on-year. 2-wheeler registration grew 33% to 17.9 lakh units, while 3-wheeler registration increased to 22% to 1.32 lakh units. Looking ahead, the demand outlook remains encouraging with 78% of dealers in the industry expecting growth during the October to December. The conversion of deferred demand around the [Dhanteras] and Diwali festive period is expected to provide further support. We believe this favorable industry trends will create a supportive environment for auto financing and help sustain healthy disbursement momentum in the coming quarters. Further, the company declared second interim dividend of INR 0.25 per equity share on a face value of INR 10 each for the financial year '26-'27, reflecting our continued commitment towards shareholder value creation. I would like to highlight the change in the Chairperson of the company from Mr. permuran Nallepilly Ramaswami Parameswaran to Mrs. Neelam Tater, Independent Directors. Looking forward, we remain confident in our ability to deliver sustainable and profitable growth and long-term value to our stakeholders. Now I request our Executive Director and CFO, Mr. Jay Mota to brief you in the financial performance for the period under review. Over to you, Jay.

Thank you, Manish, sir. Let me provide a brief overview of the financial performance for the period under review. For the quarter under review, net interest income stood at INR 52 crores, registering a significant growth of 40% year-on-year. And profit after tax for the quarter increased by 20% year-on-year to INR 14 crores, reflecting a healthy profitability and continued operational momentum. For the first half of the financial year 2027, net interest income stood at INR 94 crores, registering a significant growth of 39% year-on-year and profit after tax for the period increased by 28% year-on-year to INR 27 crores. As of September 30, 2026, our assets under management stood at INR 1,811 crores, reflecting a robust year-on-year growth of 21%. During the quarter, the disbursement stood at INR 267 crores compared to INR 233 crores in corresponding quarter of the previous year. For the first half of the financial year, disbursement has reached to INR 493 crores, registering a growth over INR 398 crores achieved in the corresponding period last year. The strong performance was primarily driven by the encouraging demand in the 2-wheeler segment, supported by the continued expansion of our dealer network and addition to the new location and the product during the quarter. During the quarter, we also added around 32,330 new customers, taking our total live customer base to over 2.45 lakhs. We further expanded our presence across the Uttar Pradesh, Madhya Pradesh, Rajasthan and Karnataka, strengthening our portfolio in the [indiscernible]. Talking about the product mix for the period under review, 2-wheeler accounted for 83.10%, top-up loan 5.70%, 3-wheeler 3% and used vehicle loan 1.60%. This clearly demonstrates that over 95% of our portfolio remains secured. On the equity side, we are successfully raising approximately INR 100 crores through a preferential issue, further strengthening our capital base and providing additional headroom to support a future loan book expansion. As of September 2026, stage 1 asset stood at INR 1,710 crores, accounting for 94.4% of the total portfolio, reflecting a strong asset quality. Stage 2 assets were INR 47 crores that is 2.6% of the gross asset and remained lower compared to the previous quarter. Gross 3 assets stood at INR 54 crores or 2.96% of the gross asset. As at the end of the quarter, GNPA and NNPA improved substantially to 2.96% and 2.19%, respectively, reflecting a lower delinquency driven by the disciplined underwriting and the strong collection efficiency. On the provisioning front, we continue to maintain prudent trends. Our expected credit loss provision stood at INR 23 crores compared to the [IRS] requirement of INR 13 crores, resulting in a healthy and excess buffer. Further, our capital adequacy ratio remained healthy at 24.69%, well above the regulatory requirement, providing ample headroom to support future growth. Overall, we believe the company well positioned for the sustainable long-term growth, supported by the strong momentum in the AUM and disbursement growth, strong asset quality, improving profitability metrics, a healthy capital position and continued strengthening of our liability franchise. Going forward, we remain focused on a disciplined growth, deeper market penetration, prudent risk management and delivering consistent value to all stakeholders. With this, we can now open the floor for the questions.

We will now begin with the question and answer session. [Operator Instructions]. The first question is from the line of Ravi Khanna, an individual investor.

Thanks for this opportunity. So I just had a few questions. So first of all, sir, your dealer network reached approximately 1932 partners across 148 locations in 7 states. However, sir, Gujarat and Maharashtra still make up nearly half of the dealer base. So I just wanted to know what is the growth trajectory and time line to achieve critical mass in newer territories like UP, MP and Rajasthan?

Yes. So Maharashtra and Gujarat were all are the potential dealers. We have already done a tie-up. So now the new -- whatever dealer tie-up is happening is basically happening is from Rajasthan, UP, MP and now Karnataka also. We have almost onboarded 100-plus dealers in the Karnataka in the first 60 days of operations. So obviously, because Maharashtra and Gujarat, we are present since more than 7 to 8 years. In fact, Maharashtra, we are there for almost 10-plus years. So those -- all the good dealers tie-up has already been done and the company will definitely focus on the new geography and add new dealers from the new geography.

Okay. Thank you, sir. Just a few more questions. So sir, you successfully raised approximately INR 100 crores through a preferential issue in Q2 FY '27, which brings your capital adequacy ratio to around 24.69%. So I just wanted to know how many quarters of growth is this capital going to support?

Yes. So first of all, we have got board approval in the second quarter. The funds are going to come in the third quarter. And this 24.69 is without taking into consider that INR 100 crores -- so when the fund will mobilize, which has been expected by 6th of November, we got the principal approval from NSE BSE. And investors have already started putting money in the escrow account and by 6th of November, this will be closed. So after putting that capital, this capital adequacy will be further improved and adding the PAT of this year as well as -- so at least for next 4 quarters, we will be able to manage 4 to 6 quarters, we will be able to manage our growth with the same capital.

Okay, sir. Right, sir. And sir, one last question from my side. Sir, what is the annual AUM and disbursement growth guidance for FY '27 and '28?

So already I have given in the previous call also this year's guidance is around 30% to 35%. We have already achieved 20% in the first half. But all the season that is basically Navratri and Diwali is coming in the second half of the year. So we will be comfortably we will reach our 30% to 35% of growth '27. And similarly, we are expecting for the '28.

Okay, sir. Understood. That's it from my side.

Thank you. The next question is from the line of Keerthan Donga from Leo Capital Limited. Please go ahead.

Sir, I had two questions. First was, what portion of the customers would have an additional loan from micro finance company or from some other lenders?

Okay. So basically, the microfinance is completely different because that generally comes into Tier 3. We are active in Tier 1, Tier 2 and Tier 3 started. And this is no overlapping of microfinance and 2-wheeler loans. 2-wheeler loans is completely secured loans. So there will be a very few instance where our borrower has taken loan in the microfinance also and the 2-wheeler also. There will be very few instance.

Sir, what [indiscernible] other lenders.

Pardon.

Any other lenders.

Any other lenders for.

For our customers, for example, any other NBFC or something like that?

So you are asking about the competitor.

Yes, yes, competitors.

Yeah…, there are a couple of 2-wheeler loans, basically IDFC, L&T and there are some regional players [indiscernible] is there. Those are the major player in the competition of the 2-wheeler loan as far as 2-wheeler loans are concerned.

Can you give some number like what portion of our customers would take loans from them?

So wherever we are there in any location if we have completed 4 years of operations, then generally, our market share is around 15%.

Okay. Is there any numbers regarding like for example, if I come and take loan from Manba, but I've also taken loans from other NBFCs. So that numbers ...

Those loans are -- generally 2-wheeler loans are very few that they have taken a 2-wheeler loan from other company and another second loan from Manba. That will be very, very few instance because generally, one person is having one 2-wheeler and mostly Manba is active in 150 cc unit. So that is basically mainly used for the utility purpose. So those customers are not -- cannot afford two 2-wheeler loans or 2 vehicles at a time. So there will be very, very rare of the rare situation where they have taken 2 loan on 2-wheelers.

Okay. And my second question was what portion of our AUM and disbursement from customers who have defaulted on other loans?

Of course, that is next to impossible because either it can be new to credit or if we have already defaulted to other lenders, then it will reflect in the CIBIL. So while onboarding new customers, there will be -- he cannot be a defaulter to other lenders. But yes, once we onboard to our company after 3 months, 6 months, if he start defaulting us also or maybe some other company, that can be the [insurances].

And what portion of our AUM will be those people.

That is impossible. So onboarding customer defaulted customer is 0.

Okay, onboarding, for example, if I take a loan from [indiscernible] company and I have defaulted there and now when I come to take loan from Manba, you will not onboarding me at all?

No, we will not.

And for example, if I was onboarded in your company and then I defaulted what is that percentage … I was onboarded in Manba and after 5 or 6 months I defaulted.

Yes.

So what will that percentage be?

So generally, our bounce rate is 18% to 20%. So this keeps on revolving because once the customer will bounce, then next time he pays also. So on an average, there are 7% to 8% customers are there who remain bounce across the tenure.

Okay, so 7% to 8% customers and the bounce rate is 18% to 20%.

Yes.

Thank you very much.