19 August 2020 Muthoot Finances (MUTH) 1QFY21 PAT increased ~60% YoY to INR8.4b (2% miss). However, according to management, the cost reduction is one-off and unlikely to sustain. As the company opened branches in May20, it witnessed more collections than disbursements. Hence, its loan book declined marginally QoQ. Standalone AUM moderated 1% QoQ to INR413b, driven by stronger collections. However, disbursements picked up toward end-1QFY21 and have sustained in 2QFY21 too. A key factor was the online disbursements (wherein the company is offering cash-backs), which have jumped 4x since the start of the lockdown. Over the past year, the company has enhanced liquidity on its Balance Sheet from INR9b in 1QFY20 to INR85 in 1QFY21. The higher liquidity weighed down on margins as borrowings have grown 38% YoY (v/s 15% YoY growth in the loan book). Management has guided to keep liquidity on the balance sheet at 10%.