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IDBI Capital Report
Muthoot Finance Ltd. reported gold loan growth at 18% YoY as compared to 15% guidance led by higher gold prices. Overall assets under management growth recovered to 20% YoY (FY24) versus 9% YoY (FY23). Management conservatively maintained AUM growth guidance of 15% YoY for FY25.
We expect 15% CAGR (FY24-26) gold loan growth versus 12% earlier. Net interest margins improved QoQ led by higher yields. Net interest income grew strongly by 12% QoQ; pre-provision operating profit grew by 8% QoQ led by higher operating expenses (up 21% QoQ).
Provisions increased by five times QoQ due to higher auctions; PAT grew by 3% QoQ. Stage III loan assets improved to 3.2% versus 3.6% QoQ, due to higher auctions (Rs 1.62 billion).
We revised estimates upwards by 11% (FY26 EPS) and upgrade to ‘Buy' rating with a new target price of Rs 1,970 (earlier Rs 1,550), valuing it at 2.4 times price/adjusted book value FY26E (earlier two times) as competitive intensity moderates.
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