Morgan Stanley has issued a positive note on Muthoot Finance in the wake of its robust loan growth in the gold segment, notably hiking the price target while maintaining a bullish call.
The brokerage firm has maintained an 'overweight' rating on the counter while hiking target price from Rs 4,050 to Rs 4,385.
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Morgan Stanley pointed out that Muthoot Finance's gold loan segment is expected to shine heading into the earnings season.
As such, the firm has raised FY26 to FY28 earnings per share estimates, driven entirely by higher gold loan growth.
The firm has also raised its loan growth estimate by 50% on a year-on-year basis versus 43% earlier, further highlighting the outperformance when it comes to growth in the gold loan segment.
Keeping that in mind, Morgan Stanley has built 17.5% quarter-on-quarter loan growth in the third quarter of FY26 vs a 23% increase in average gold prices.
In light of the strong outperformance in the gold segment, Morgan Stanley believes the sum of the parts price target and scenario values to increase 8%.
Out of 25 analysts tracking the company, 15 maintain a 'buy' rating, six recommend a 'hold,' and four suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 3.1%.
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