Manappuram shares slump on profit worries

Last Updated: Wed, Mar 20, 2013 07:08 hrs

Shares in Manappuram Finance Ltd extend falls, dropping 10.8 percent, after the company said on Tuesday it expects an "under recovery" of revenue on certain gold loan portfolios due to a correction in gold price.

The under recovery may result in a reduction in profit numbers for the January-March quarter, Manppuram said, sending shares down 20 percent in the previous session.

Bank of America-Merrill Lynch downgrades the stock to "underperform" from "buy", and reduces its target price to 20 rupees from 48 rupees, citing higher-than-expected under reoveries.

"Guidance has been inconsistent and the risk to future earnings is high," BofA-ML says.

Manappuram's peer Muthoot Finance Ltd falls 4.3 percent on fears that its profit growth may also stall, dealers say.

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