Buy Muthoot Finance; target of Rs 1714: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Muthoot Finance

MUTH recorded a flat loan growth (QoQ and 8.5% YoY) at Rs 546bn. Despite underlying asset price fluctuations and flat customer accretion (fresh loans from new customers) led by third wave challenges, MUTH maintained 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. There was no impact on asset quality due to RBI circular. Auction value at Rs28000mn (5% of gold loans) inched up during the quarter.

Outlook

We have maintained our EPS estimates and our confidence stands reinforced by (a) healthy CAR (~30%) (b) healthy 18% AUM CAGR backed by customer accretion and (c) superior asset quality (<1.5%GNPA) translating into high RoA/RoE 6.2%+/21-22% resp. over FY22-FY24. Our core book multiple stands at 2.7x PABV Sep’23E. Subsequently our SoTP now stands at Rs. 1,714 (standalone: Rs1,699 & subsidiary: Rs14). We reiterate BUY.

More Info

At 15:44 hrs Muthoot Finance was quoting at Rs 1,348.70, down Rs 6.60, or 0.49 percent.

It has touched an intraday high of Rs 1,376.65 and an intraday low of Rs 1,303.65.

It was trading with volumes of 75,861 shares, compared to its thirty day average of 23,510 shares, an increase of 222.68 percent.

In the previous trading session, the share closed down 4.89 percent or Rs 69.70 at Rs 1,355.30.

The share touched its 52-week high Rs 1,722.55 and 52-week low Rs 1,120.45 on 15 November, 2021 and 22 April, 2021, respectively.

Currently, it is trading 21.7 percent below its 52-week high and 20.37 percent above its 52-week low.

Market capitalisation stands at Rs 54,129.34 crore.

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