Fitch Affirms Manappuram Finance at 'BB-' with Stable Outlook Reflecting Resilient Business Profile

Fitch Affirms Manappuram Finance at ‘BB-’; Maintains Stable Outlook on Strong Business Fundamentals

Fitch Ratings reaffirmed Manappuram Finance Limited’s (MFIN) long-term foreign and local currency issuer default ratings at ‘BB-’ with a stable outlook. This affirmation reflects the company’s resilient franchise in gold-backed financing, which comprises over half of its portfolio, supported by stable asset quality and generally stable funding and liquidity profiles.

Manappuram’s ratings benefit from the liquidity of its gold loan portfolio, underpinned by market-accepted valuation methodologies and enforceable auction mechanisms that mitigate credit risk. The stable outlook reflects Fitch’s expectation that MFIN will maintain steady performance in semi-urban and rural consumer lending segments despite a gradually shifting business mix towards riskier microfinance and small business loans.

The rating agency highlighted the company’s high risk appetite and evolving portfolio composition, reflecting increased exposure to non-gold rural sectors and a decentralized branch-led operation. Fitch noted a history of regulatory compliance challenges but acknowledged management’s commitment to improving governance and operational processes.

Fitch expects India’s economic growth to remain healthy, supporting the asset quality and earnings of non-bank finance companies like Manappuram. The company’s strategy to reduce the share of gold loans moderately while expanding into new segments will be closely monitored for credit impact.

Key risk factors include reputational and regulatory challenges as well as operational risks from the branch expansion model. Fitch will consider rating upgrades if Manappuram demonstrates consistent regulatory compliance, improved business mix, and sustained strong asset quality.

Key Highlights

Rating Affirmed: Long-term issuer default rating maintained at ‘BB-’ with stable outlook.

Strong Gold Loan Franchise: Gold-backed loans constitute 56% of portfolio, ensuring asset quality.

Stable Funding and Liquidity: Adequate funding profile supports business operations.

High Risk Appetite: Gradual shift towards riskier rural microfinance and small business loans.

Regulatory Compliance: Past challenges present ongoing risks, but management shows focus on improvements.

Economic Support: India’s GDP growth forecasts expected to underpin sector performance.

Rating Outlook: Stable, with upgrade potential linked to compliance and asset quality improvement.

Source: Fitch Ratings, Manappuram Finance Ltd disclosures, October 2025.