Manba Finance Ltd Downgraded to Sell Amid Mixed Financial and Technical Signals

Quality Assessment: Weakening Fundamentals Despite Profit Growth

Manba Finance’s quality rating has come under pressure due to its flat financial performance in the second quarter of FY25-26. The company reported operating cash flows at a yearly low of ₹-323.56 crores, highlighting liquidity concerns. While the firm’s Return on Equity (ROE) remains modest at 10.84%, this level is considered weak relative to industry peers and the broader NBFC sector, which typically targets ROEs above 15% for robust financial health.

Despite a 21% rise in profits over the past year, the company’s overall financial strength is undermined by stagnant operational metrics and a lack of significant improvement in core earnings quality. The absence of domestic mutual fund holdings—currently at 0%—further signals a lack of confidence from institutional investors who often conduct rigorous due diligence before committing capital. This absence may indicate concerns about the company’s business model or valuation at current price levels.

Valuation: Attractive Price-to-Book Ratio Amidst Mixed Returns

On the valuation front, Manba Finance presents a somewhat compelling case with a Price-to-Book (P/B) ratio of 1.8, which is relatively attractive for an NBFC of its size. This suggests that the stock is trading at a discount compared to its book value, potentially offering value to long-term investors. However, this valuation advantage is tempered by the company’s negative stock returns over recent periods.

Specifically, Manba Finance’s stock has declined by 10.09% over the past year and 14.91% year-to-date, contrasting sharply with the Sensex’s positive returns of 7.62% and 8.39% respectively over the same periods. This underperformance raises questions about market sentiment and the company’s ability to generate shareholder value in the near term.

Financial Trend: Flat Quarterly Performance and Cash Flow Concerns

The company’s financial trend remains flat, with the latest quarterly results for Q2 FY25-26 showing no significant growth or decline. This stagnation is a concern in an industry where consistent improvement in earnings and cash flows is critical for sustaining investor confidence. The operating cash flow figure of ₹-323.56 crores is particularly alarming, indicating that the company is burning cash at a substantial rate, which could pressure liquidity and operational flexibility going forward.

Moreover, the lack of domestic mutual fund participation suggests that institutional investors are either cautious or unconvinced by the company’s current trajectory. This absence of institutional backing often correlates with subdued market interest and can limit the stock’s upside potential.

Technical Analysis: Downgrade Driven by Shift to Mildly Bullish Indicators

Technical factors have played a pivotal role in the downgrade of Manba Finance’s rating. The technical grade has shifted from bullish to mildly bullish, reflecting a more cautious market outlook. Key indicators reveal a mixed picture:

• MACD on the weekly chart is mildly bullish, but monthly signals are inconclusive.


• Relative Strength Index (RSI) shows no clear signal on both weekly and monthly timeframes, indicating a lack of momentum.


• Bollinger Bands on the weekly chart suggest mild bullishness, but monthly data is again inconclusive.


• Moving averages on the daily chart remain bullish, providing some short-term support.


• KST indicator is bullish on the weekly chart, but monthly trends are less definitive.


• Dow Theory shows no trend weekly and mildly bullish monthly, reflecting uncertainty.


• On-Balance Volume (OBV) indicates no trend on both weekly and monthly charts, signalling weak volume support.

Price action has been subdued, with the stock closing at ₹138.10 on 30 Dec 2025, down marginally by 0.14% from the previous close of ₹138.30. The 52-week high stands at ₹165.80, while the low is ₹115.15, indicating a wide trading range but recent weakness near the lower end. The stock’s one-week return of -1.6% also underperforms the Sensex’s -1.02% over the same period, reinforcing the cautious technical stance.

Comparative Market Performance and Sector Context

Manba Finance’s returns lag significantly behind the broader market benchmarks. Over the past year, the Sensex has delivered a robust 7.62% gain, while Manba Finance’s stock has declined by over 10%. Even on a year-to-date basis, the stock’s negative 14.91% return contrasts sharply with the Sensex’s positive 8.39%. This divergence highlights the company’s relative underperformance within the NBFC sector and the broader financial services industry.

Given the company’s modest market capitalisation grade of 4 and a Mojo Grade now at Sell, investors are advised to exercise caution. The downgrade reflects a comprehensive reassessment of the company’s prospects, factoring in both fundamental and technical weaknesses.

Outlook and Investor Considerations

While Manba Finance exhibits some attractive valuation metrics, the overall downgrade to Sell reflects a cautious stance driven by weak long-term fundamentals, flat financial trends, and a shift in technical momentum. The company’s inability to attract institutional investors, coupled with negative cash flow and underwhelming stock performance relative to the Sensex, suggests that risks currently outweigh potential rewards.

Investors should closely monitor upcoming quarterly results and any changes in operational cash flows or institutional interest. Until there is clear evidence of sustained improvement in financial health and technical indicators, maintaining a cautious approach is prudent.

For those seeking exposure to the NBFC sector, exploring alternative companies with stronger fundamentals and more favourable technical profiles may offer better risk-adjusted returns.

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