Muthoot Finance Share Price Edged in the morning session on March 3 because the Research Company Motilal Oswal announced a buying call on shares with a target of Rs 1,750 and rose 26 percent Stock traded at Rs 1,421.45, up to RS 32.90 or 2.37 percent at 09:41 hours at BSE. It touches the highest intraday Rs 1,429.15 and low intraday Rs 1,399.
According to the brokerage company, Muthoot Finance is the top choice of the NBFC room for 2022. Standalone Aum (assets under management) recorded 17% of the annual growth rate of compounds (CAGR) over FY16-21. Even before the Covid-19 outbreak and run-up sharply in the price of gold in FY21, the company has delivered a CAGR of two / three / four years 19/15 / 14% in March 2020. Higher gold prices denied demand for gold loans. In addition, Muthoot Finance has a strong brand and a well-rooted distribution that will help them get additional share in the expanded market pie for gold loans, said Motlal Oswal.
“Muthoot Finance has achieved an extraordinary increase in operating efficiency. Although it has not yet added branches / employees aggressively, AUM per employee almost doubled to Rs 2.03 Crore above FY16-21. The same thing is true for Aum per branch too . We believe the current cost ratio is 3.3% (as an average loan percentage) ongoing on FY23-24. Even though NIM (net interest margin) has witnessed a sharp contraction because of a growing challenger (especially aggressive and fintechs) in Gold financing, we believe the same thing has dropped to the current level of 13% and must remain stable in the medium term, “added the Oswal Motilal.
The broker believes that Muthoot Finance marks all the right boxes including a strong execution track record from the management and next generation of families prepared to take the position of leadership in the future “AA + credit rating and consequently lower borrowing costs will allow it to offer competitive interest rates to customers and their ability to continue to direct operating efficiency can cause 15% AUM and profit after CAGR tax through FY22-24,” The research company said.
“The company seems very positioned to provide ROA / ROE Standalone (return to assets / equity) of 6/22% over the medium term. Muthoot Finance is our main choice among NBFC, with the target of Rs 1,750 (2.7x FY24E standalone BVPs) and reversed 26%, “he added.
In an interview with CNBC-TV18, George Alexander Muthoot, MD at Muthoot Finance, said that it was a good sign that the price of gold remained stable. He believes, with the increase in overall credit growth, the demand for gold loans will increase. Brokers argue that the gold loan market develops. He added that the company saw better traction in Q4 compared to Q3 He said, “Q3 is a quarter lightning as far as concerned. We see growth coming from all over the country and from here, the economy will also begin to stare.”