Shares of Muthoot finance opened lower on February 7 after the company reported its Q3FY23 results. At 11:10am the stock was trading 3.05 percent lower at Rs 1005.80 apiece on the BSE, while the benchmark Sensex was 55.36 points or 0.09 percent down at 60,451.54.
The company reported 11 percent year-on-year (YoY) decline in Q3FY23 consolidated net profit at Rs 928 crore; consolidated net sales dropped 5 percent YoY to Rs 3,010 crore, it said in a stock exchange filing after market hours on Monday.
The net profit declined due to a 10 percent drop in net interest income at Rs 1,704 crore against Rs 1,886 crore in the corresponding period of the last fiscal. However the firm was able to beat analysts’ estimates as it benefited from higher gold prices during the festive season.
The loan assets under management (AUM) grew 7 percent on a yearly basis to Rs 65,085 crore while sequentially the growth was muted at 1 percent.
Brokerage Firm CLSA gave Muthoot an 'underperform' rating cutting its target price to Rs 1,140 per share. They lowered AUM growth expectations while also trimming FY24-25 net profit forecasts by 1-2.5 percent. They also added that Gold Loan Book growth was flat compared to Banks which saw decent growth.
Commenting on the performance George Alexander, Managing Director at Muthoot said, " Muthoot Finance registered a YoY growth of 6 percent in loan assets and marginal QoQ growth in gold loans of less than 1 percent. Yield on loan portfolio witnessed a QoQ increase of 0.84 percent consequent to stoppage of very low rate teaser loans.” He also added that borrowing cost slightly rose to 8.13 percent due to the impact of general increase in the interest rates with banks MCLR being constantly revised and fresh NCDs (Non-convertible debentures) being raised at higher rates.
“Our continued focus on loan disbursements, recovery efforts and keeping our borrowing costs under check could enable us to maintain our NIMs (net interest margin) in the range of 11-12 percent. Return on assets for the quarter improved to 6.27 percent.” George said.
Brokerage firm Morgan Stanley gave an equal-weight rating with a target of Rs 1,150 per share adding that gold loan growth remains low at 1 percent QoQ and cited PPOP (Pre provision operating profit) growth of 7 percent on a sequential basis was driven by higher loan yields.
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