Shares of Muthoot Finance surged nearly 8% on November 18, driven by robust quarterly performance, a significant milestone of crossing ₹1 lakh crore in Assets Under Management (AUM), and strong growth in gold loans. The demand for gold loans has picked up, partly due to the Reserve Bank of India’s (RBI) tightened regulations on unsecured lending.
Key Financial Highlights:
- AUM Growth: Muthoot Finance’s consolidated AUM grew 31% YoY to ₹1.04 lakh crore.
- Gold Loan AUM: A record ₹86,164 crore, with most loans repaid within six months due to strong collection efficiency.
- Net Profit: The lender reported a 26% YoY growth in net profit at ₹1,250 crore for the September quarter.
- Revenue: Revenue jumped 35% YoY to ₹4,120 crore.
Analyst Outlook:
- Bernstein maintained an Outperform rating with a target price of ₹2,000.
- Morgan Stanley upgraded the stock to Equal Weight from Underweight, citing an improving environment but cautioning about sectoral concerns.
Strategic Moves:
Muthoot Finance has approved an additional ₹500 crore fund infusion into its wholly-owned subsidiary, Muthoot Money. This move aims to bolster its capital base and improve the capital adequacy ratio.
Growth Drivers:
Managing Director George Alexander Muthoot explained that the rural part of India, which continual possessed two-thirds of the gold in the country, continued to drive growth for gold loans. Also, even the restrictions put by the RBI on unsecured loans have paid dividends for the company’s growth in this segment.
Stock Performance:
The stock has recovered from a sharp sell-off earlier in November and is now up 31% year-to-date.
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Source: Moneycontrol
News Desk
