Expect 15% AUM growth going ahead – Muthoot FinanceSharvari Joshi
Update on the Indian Equity Market:
On Wednesday, NIFTY closed in red at 13,478 (-0.38%). Top gainers in NIFTY50 were Nestle (+4.1%), ITC (+3.8%), and Britannia (+3.1%). The top losers were UPL (-11.3%), Ultra Cement (-3.3%), and Shree Cement (-2.8%). The top sectoral gainers were FMCG (+2.8%), REALTY (+0.4%), and METAL (+0.2%) and the sectoral losers were MEDIA (-1.6%), PSU BANK (-1.5%), and AUTO (-0.9%).
Excerpts of an interview with Mr. George Alexander Muthoot, MD – Muthoot Finance with CNBC TV18 dated 9th December 2020:
• 3QFY21 has seen a reasonable pick up in the gold loan financing business and the demand for gold loans among MSME and small shop owners have been recovering, according to Muthoot Finance.
• Gold loans would do well in the coming days as the demand in most places has risen reasonably.
• In Q3FY21, they are seeing a reasonably good pick up in gold loan demand. Everywhere things are starting to open up, so probably business should come back to what it was pre-COVID.
• As far as gold loan is concerned, they see good pick up in the demand and they see gold loan companies doing well in the coming days.
• He expects to see a minimum of 15 percent assets under management (AUM) growth on a
• Year-on-year (YoY) basis in the next four-five years.
• Gold prices are expected to stabilize near Rs 50,000 per 10 grams level going forward.
• Banks get bigger loans while NBFCs get smaller ticket-sized loans.
• Muthoot Finance plans to open around 100-150 branches in the next 12 months.
Consensus Estimate: (Source: market screener and investing.com websites)
• The closing price of MUTHOOTFIN was ₹ 1,183/- as of 10th December 2020. It traded at 3.6x/ 2.6x/ 2.2x the consensus Book value estimate of ₹ 364/ 451/ 540 for FY21E/FY22E/23E respectively.
• The consensus price target of MUTHOOTFIN is ₹ 1,300/- which trades at 2.4x the book value estimate for FY23E of ₹ 540/-
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