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Buy Muthoot Finance; target of Rs 145: A C Choksi

A C Choksi is bullish on Muthoot Finance and has recommended buy rating on the stock with a target price of Rs 145 in its September 3, 2012 research report.

September 03, 2012 / 04:04 PM IST
 
 
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A C Choksi is bullish on Muthoot Finance and has recommended buy rating on the stock with a target price of Rs 145 in its September 3, 2012 research report.


“Muthoot Finance Ltd was incorporated on March 14, 1997 as a private company with the name The Muthoot Finance Pvt Ltd. Muthoot Finance Ltd is the largest gold company in India. The company provides personal and business loans secured by gold jewellery, or Gold Loans.”


“Company has showed strong performance in June 2012 Quarter. Company's operating income grew by 41.32% from Rs. 908.55 cr in June 2011 to Rs. 1283.95 cr in June 2012. Profit after Tax in June, 2012was Rs. 246.11 cr as compared to Rs. 190.45 cr in June, 2011 which is up by 29.23%. Company's operating income increased by 96.43% to Rs. 4548.93 cr in FY12 as compared to Rs. 2315.80 cr in FY11. Net Profit of companywas Rs. 892.02 cr In FY12 AS as compared to Rs. 494.18 in FY11 because of stable margins. Gold Loans under management (comprising 99% of total loans) rose 30% to Rs 23082.1 crore in June 2012.While Loans against NCDs rose 81% to Rs 243 crore and other loans fell 4% to Rs 10.8 crore. Management expects AUMto grow by 10-15% in FY13. Gold holding increased to 130 tonne at the end of Q1FY'13 compared to 120 tonne inQ1FY'12.”


“Muthoot Finance recorded ROE of 32.36% in June, 2012 which is higher than ROE of Manappuram Finance at 25.65% in June, 2012. Gold Loans Assets Under Management of Muthoot finance was Rs. 23082.1 crore in June, 2012 which is double than that of Manappuram Finance Gold Loans AUM which was Rs. 10738.8 crore in June, 2012. Muthoot Finance has 130 tonnes of gold stock in June, 2012 whereas Manappuram has 60.59 tonnes of gold stock in June, 2012.  Company has performed efficiently and has decreased its operating expenses to Average retail loans from 4.33% in June, 2011 to 3.72% in June, 2012. And Y-O-Y it has decreased its operating expenses from 4.28% in FY11 to 4.02% in Fy12.”


“Company has 3800 money transfer outlets across the country and is the second largest player in the country. Management expects to double its pay outs in FY13 from Rs. 3500cr in last fiscal because the rupee depreciation has increased the demand for money transfers among Indians working in the Middle East. The company 60% of total money transfer business accounts from Middle East. Thus,we recommend buy on the stock for medium term for the target of 145,” says  A C Choksi research report.


Institutional holding more than 40% in Indian cos


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To read the full report click on the attachment 

first published: Sep 3, 2012 03:36 pm

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