MUTH’s standalone PAT declined by 17% YoY to ~INR8b (23% miss), led by a compression of ~220bp YoY in NIM and the annualized OPEX/AUM ratio remaining elevated at 3.8% (PY: 3%). For MUTH, 1QFY23 was characterized by: a) a 2.4% QoQ decline in Gold AUM, led by auctions of ~INR13.7b (FY22: INR52b), and some closure of teaser-rate customer accounts, who were migrated to higher interest rates; b) ~180bp QoQ decline in spreads to 9.6%, reflecting the impact of teaser-rate loans disbursed during Dec’21 to Mar’22; and c) elevated advertising and publicity costs at INR467m (PQ: INR366m), suggestive of the aggressive brand campaigns in the face of the current competitive landscape in high-ticket gold lending.
OutlookGiven the lack of loan growth visibility and a structural change in Gold loan NBFC business models that we foresee, we believe there are limited triggers for a further upside in the stock. We downgrade the stock to Neutral with a TP of INR1,250 (based on 2.1x FY24E P/BV) .
For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Muthoot Finance - 140822 - motiDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
