Muthoot Finance Ltd. share price forecast

Will continue to stand tall despite the many challengers Muthoot Finance (MUTH') is our top pick for CY22 in the NBFC Lending space. Our investment idea is premised on our thesis of a structural opportunity in Gold lending as the market pie expands with customers evolving, taboo around Gold loans fading away, and apprehensions regarding Gold loans addressed through customer education. In this report, we list MUTH's competitive strengths vis--vis its peers and some of the challengers like Fintech Gold loan NBFCs. MUTH is well placed to...

underlying asset price fluctuations and flat customer accretion (fresh loans sequential steady traction in tonnage movement. Asset quality marginally deteriorated (Stage 3: 3.82% vs 1.85%: Q2FY22) largely due to higher disbursements in Q3FY21 (when gold prices were at peak) and restructuring....

For MUTH, 3QFY22 was characterized by: a) interest cost savings, which led to an in line PPOP/PAT performance; b) elevated Gold loan auctions of INR28b, which resulted in gold AUM remaining largely flat QoQ, c) stable spreads of 13%, despite an aggressive competitive landscape; d) GS3 increasing by ~200bp QoQ to 3.8%, suggesting that auctions will remain elevated in 4QFY22 as well to pare down GS3 to the management's guided level of 2-3%. We estimate MUTH to deliver a gold loan growth of ~10% in FY22E. However, this incremental growth in 4Q will come at the cost of a minor compression in spreads/margin,...

Q2FY22 saw a good growth traction compared with Q1FY22. Gold loan AUM grew 5% QoQ and 18% YoY to INR54700. Increased QoQ tonnage (178 tonnes), increased share of online gold loan customers (29.4% of total) assisted growth momentum....

...

Muthoot Finance (MUTH) reported lower growth in gold AUM at 18% YoY vs 29% YoY (Q1FY22). Overall cons. AUM grew by 17% YoY; management maintained the guidance of 15% growth for FY22. Profitability growth was lower at 11% due to higher provisions. NII grew by 14.5% YoY led by decline in margins; while PPoP grew by 17% YoY led by lower operating expenses. Provisions increased by 595% YoY (up 121% QoQ) due to asset quality deterioration. Stage III loan assets increased to 1.9% vs 1.2% QoQ, while Company carries excess provision of Rs2.95bn in balance sheet. We believe that MUTH with ~90% of AUM in the Gold loan portfolio has lower risk of loss of assets versus...

underlying asset price fluctuations, gold AUMs grew 5%QoQ/18%YoYin commensurate with gold holdings per branch, customer accretion stood robust (46%+QoQ increase in fresh loans from new customers, 30%QoQ of fresh loans with new collaterals) and tonnage growth was healthy (9%YoY/4%QoQ). MUTH clocked 18%YoY loan growth and traction in tonnage inched up QoQ. While asset quality marginally deteriorated (Stage 3: 1.85% vs 1.22%: Q1FY22) with Co. doubling provisions QoQ, we reckon it's a...

It posted an OPEX beat of 6% OPEX declined by 2% YoY, but grew 10% QoQ to INR4.4b. The cost ratio declined by 80bp YoY to 3.3%. PPOP (3% beat) grew by 17% YoY and 6% QoQ to INR14.14b. Gross Stage 3 increased by 63bp QoQ to 1.85% in 2QFY22. We expect MUTH to deliver standalone AUM growth of ~17%/14% in FY22E/FY23E. RoA/RoE is likely to remain robust (6%/23%) over the medium term. We cut our FY22E/FY23E EPS estimate by ~2%/1% to factor in slightly...

Muthoot is the largest gold-financing NBFC

Muthoot Finance (MUTH) reported strong growth in gold AUM at 29% YoY vs 27% YoY (FY21). Overall cons. AUM grew by 25% YoY; management guided for 15% plus growth on conservative basis in FY22. Profitability growth was lower at 15% due to higher provisions. NII grew by 18% YoY led by decline in margins; while PPoP grew by 17% YoY led by lower other income. Provisions increased by 131% YoY (up 203% QoQ) due to asset quality deterioration. Stage III loan assets increased to 1.2% vs 0.9% QoQ, while Company carries excess provision of Rs2.95bn in balance sheet. On Non gold portfolio front, Restructuring stood at Rs17.3bn, however, stage III in VF and MFI business stands...

Auction at mere Rs370mn due to higher than peer tenure (12-month) despite underlying asset price fluctuations and tepid customer accretion (30%+QoQ decline in fresh loans from new customers) led by second wave challenges, MUTH clocked 29%YoY loan growth and maintained sequential steady traction in tonnage movement. Asset quality marginally deteriorated (Stage 3: 1.2% vs 0.9%: Q4FY21) with Co. tripling provisions QoQ largely to tackle subsidiaries book. Auction value at Rs370mn (<0.1% of gold loans)...

While early greenshoots were visible closer to Q4FY21, the second wave impact led to U-turn with NBFCs expected to take huge brunt. We reckon this impact to stand pronounced than the first wave especially when it comes to asset quality. Collection efficiencies across business segments took a toll in the months of May-Jun'21 (CE <60%), due to stringent lockdowns followed by disruption in business activities. With regulatory dispensations behind (morat, restructuring), we will closely monitor credit profiles of micro financiers, small ticket MSME and vehicle financiers. We also note good...

We reiterate BUY' rating on MUTH and tweak our core book multiple higher Change in Estimates | Target | Reco (standalone: Rs1,686, subsidiary: Rs14) (earlier Rs1,486). We have revised...

Muthoot Finance (MUTH) reported strong growth in gold AUM at 27% YoY vs 21% YoY (FY20) (32% YoY in Q3FY21). Overall AUM grew by 24% YoY; management guided for 15% growth on conservative basis in FY22. Profitability growth was lower at 22%. NII grew by 16% YoY led by decline in margins; while PPoP grew by 24% YoY led by improvement in cost to income ratio (28% vs 33% YoY). Provisions declined sequentially by 81% while up 131% YoY. Stage III loan assets improved to 0.88% vs 1.30% QoQ, while Company carries excess provision of Rs2.95bn in balance sheet. On Non gold portfolio front, Restructuring stood at Rs0.06bn, however, stage III in VF and MFI business stands...