Muthoot Finance - Stellar Quarter; Growth Guidance Revised Upwards: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Muthoot Finance Ltd. delivered a stellar Q2 FY25 performance on most parameters. Operating profit came in ahead of estimates at Rs 19.2 billion (versus estimate of Rs 18.4 billion) aided by a strong 28% YoY growth in Gold loan portfolio, steady net interest margins at 11.5% and lower than expected opex. However, due to higher-than-expected provisions at Rs 2.1 billion (versus estimate of Rs 1.1 billion), PAT was in-line at Rs 12.5 billion. Strong customer addition (4% QoQ) for the second consecutive quarter and 4%QoQ increase in LTV ratio to 66%, aided strong growth in Gold AUM, even as average gold price was stable sequentially. While asset quality further deteriorated as gross stage III ratio in standalone entity increased to 4.3% from 4% in Q1, it is not a cause of concern, as higher Gold price provides comfort. However, GS3 asset ratio in microfinance subsidiary (9% of Portfolio) also jumped to 3.5% from 2.4% in Q1, which led to elevated credit cost. Continued risk aversion in unsecured segments is causing many borrowers to shift to Gold loan, driving strong growth in new customer addition. We have revised our estimates upwards for FY25/FY26 to factor in strong performance in H1 FY25 and continued healthy demand for gold loans. We estimate a 21% CAGR in Muthoot Finance’s AUM to deliver a 22% CAGR in earnings over FY24-FY26E. At CMP stock trades at 2.2 times FY26 book value with RoA of 5.4% and RoE of 20%. We Maintain our Buy rating on the stock with a revised price target of Rs 2,250 (earlier Rs 2,050). Key risks- significant fall in gold pricetightening of regulatory norms for gold loans..Click on the attachment to read the full report:.India MF Tracker - Net Equity Inflows Surge To All-Time High, Underpinned By Lower Redemptions: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Muthoot Finance - Stellar Quarter; Growth Guidance Revised Upwards: Systematix

The company is likely to benefit from increased demand for gold loans, as other lenders in the system are slowing down on unsecured loans, says the brokerage.

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