Last updated: 20 Aug, 2020 | 10:10 am
Strong rise in profit: Muthoot Finance has reported a robust 59% on-year rise in net profit to ₹841 crore, backed by a robust rally in gold prices in the quarter. Total revenue from operations also rose 28% to Rs 2,385 crore in Q1 from Rs 1,857 crore in the last year
Muted growth in loan book: “Muthoot Finance’s branches were completely shut in April due to nationwide lockdown. As the company opened branches in May, it witnessed more collections than disbursements, leading to a marginal decline in loan book (QoQ).” However, the company said that it has upscaled its digital platforms, leading to a four-fold jump in digital loan disbursals since then.
Management guidance: While there has been a temporary blip, the management has guided for a 15% growth in gold loan portfolio for FY 21. Muthoot Finance’s non-gold loan portfolio in subsidiaries constituted about 12 per cent of its consolidated loan portfolio. Collections in non-gold loan portfolio have significantly improved month on month. Additional Covid ECL provisions to the extent of Rs.32 crore were made for non-gold loan portfolio in the quarter.
While AUM growth was impacted in the quarter, this is likely to pick up going forward, as lockdowns ease in various parts of the country, and disbursements improve. The demand for gold loans has picked up in Jul-Aug’20, and is expected to sustain given the current economic environment. The company also maintained a liquidity buffer of Rs.8,477 crore as cash, bank and investments in liquid funds as on June 30, 2020.
Consensus recommendation: Buy (Based on views of 13 analysts from external institutions)