Muthoot Finance's (MUTH) 2QFY21 PAT increased 4% YoY to INR8.9b (4% beat). The quarter was characterized by best sequential loan growth of 14% (since FY12), stable spreads and sharp improvement in asset quality. With the help of refinancing and strong QoQ growth, GS3% declined 130bp QoQ to 1.26%. In 1HFY21, net income/PAT increased 18%/25% YoY to INR31.7b/INR17.4b. - From an average monthly rate of INR69b in 1QFY21, disbursements spiked to INR167b in 2QFY21, which drove strong loan growth. We estimate 17% loan CAGR over FY20-23E and increase our FY21/22E est. by 2-3%. Buy with TP of INR1,460 (3x Sep'22E BVPS).
OutlookWe increase our FY21/22E EPS estimates by 2-3% to factor in stronger growth. Maintain Buy with TP of INR1,460 (3.0x Sep'22E BVPS).
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