Rajen Shah, CIO at Angel Broking told CNBC-TV18, "I am not very positive on Manappuram Finance. Muthoot Finance's numbers also disappointing. Though one looks at the EPS, one sees a Rs 27 EPS, stock is quoting at about Rs 140 or so. It is trading at about five times."
He further added, "I was just seeing the kind of outstanding gold loans they have, Rs 26000 crore worth of gold loan is outstanding and the total gold pledge is about 134 tonnes which works out around Rs 35000 crore of gold which is pledged with Muthoot Finance."
"We saw a 15 percent cut in gold prices. If something like that happens I am very negative on gold because I am very sure that Italy also could also be on the verge of bankruptcy and they hold about 2500 tonnes of gold. So they may come to the market to sell and that could take the gold prices down. So I am not bullish on these gold financing companies like Muthoot Finance or Manappuram Finance."
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