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Buy Muthoot Finance; target of Rs 568: Edelweiss

Edelweiss is bullish on Muthoot Finance has recommended buy rating on the stock with a target price of Rs 568 in its research report dated May 16, 2018.

May 24, 2018 / 06:27 PM IST
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Edelweiss's research report on Muthoot Finance

Muthoot Finance (Muthoot) reported in-line PAT of INR4.5bn (flat QoQ) in Q4FY18. Key highlights: a) modest gold loan AUM growth due to weak underlying demand; b) revenue momentum sustained benefiting from lower borrowing cost & higher recoveries from six-months’ overdue loans; c) borrower-wise classification norms led to further rise in GNPLs to 7.0% (5.6% in Q3FY18);


Post a soft H1FY18, Q4FY18 saw some accretion in AUM (5%). We expect AUM growth to gather pace on enhanced demand from business segments post GST stabilisation. This, alongwith controlled costs and provisioning, is estimated to drive >20% earnings CAGR over FY17-20. At CMP, the stock trades at 1.7x FY20E P/ABV for RoA/RoE of >5%/20%. We maintain ‘BUY/SO’ with TP of INR568.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: May 24, 2018 06:27 pm

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