Muthoot Finance (MUTH)’s 3QFY24 performance was characterized by: 1) gold loan growth of ~2.5% QoQ to ~INR692b; 2) stable NIM QoQ at ~11.2%; and 3) decline in the cost-to-income ratio to ~29% (vs. ~28% in 2QFY23). Standalone 3QFY24 PAT grew 14% YoY and 4% QoQ to ~INR10.3b (in line). Net total income rose 12% YoY to ~INR19.6b (in line), while PPOP grew 10% YoY to ~INR13.94b (in line). 9MFY24 PAT rose ~16% YoY to ~INR29.9b. Gold loan growth was supported by gold tonnage growth and an increase in the customer base of ~1% QoQ. Higher gold prices during the quarter resulted in LTV declining ~5bpp QoQ to ~65%. We model a standalone AUM CAGR of ~13% over FY23-FY26E. This, we believe, will result in a PAT CAGR of ~15% over this period. We model RoA/ RoE of ~5.2%/18% in FY26. Like last year, we expect higher gold prices to support gold loan growth for the sector as well as for MUTH in 4Q, given that there are levers now for improving the LTV through top-ups on gold loans.
OutlookWith limited fundamental catalysts for the stock and no significant change in the competitive landscape, we maintain our Neutral rating with a revised TP of INR1,440 (based on 1.8x FY26E 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 - 16022024 - 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.
