Dalal Street

Manappuram General Finance & Leasing is mainly involved in Loans against Gold. Almost 85% of its folio.The combined size of the loan portfolio (of MAGFIL and Manappuram Finance (Tamil Nadu) Pvt Ltd) could be Rs. 750 cr., (inclusive of off-balance sheet items) as of March 2008. As per the method of accounting followed by MAGFIL, Interest received/accrued on account of gold loan receivables assigned to its institutional lenders is credited to interest account net of interest paid /credited to these lenders on accrual basis. This portfolio size could increase by 30%+ in the coming year i.e. FY09.The average cost of funds for advancing gold loans is close to 12% and the average interest earned is around 21% – 23%. This leads to a healthy spread of 9% – 11%. (more…)

In several research notes on the Indian 2 Wheeler industry, it is observed that the sector will underperform in the near term. In Q3FY08 the environment for the two wheelers was negative. Banks had tightened the credit norms and increased the down payment requirement, which has rendered a large number of potential two wheeler buyers ineligible for obtaining loans. The competitive intensity in the industry has also increased.Total vehicle sales during the quarter are expected to increase by 2.6%.

Bajaja Auto is the only market performer and that to due to the de-merger of Bajaj Allianz Insurance / Finance company. TVS and hero Honda are market underperformers.
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