Muthoot Finance shares rise 5% after strong third quarter, but analysts are cautious about margin outlook

on the morning of February 15, a day after the company announced a 14% increase in net profit for the December quarter, even as brokerages remained cautious as margins were lower than expected. Mutoot Finance’s share price rose 5%.

The gold finance company’s share price has fallen over 6% in the last month, compared to a 2% decline in the benchmark Sensex.

Follow our live blog for all market trends

CLSA analysts have an “underperform” view on Muthoot Finance, with a price target of Rs 1,440 per share.

“Although net interest margin (NIM) may improve somewhat, cost of funds is likely to rise further. The company’s subsidiaries are doing well in terms of growth, but only account for 10% of consolidated assets under management (AUM). ” said the brokerage.

The company’s third-quarter revenue increased 27% from the same period last year.

Analysts at Morgan Stanley shared an ‘underweight’ rating on the stock, with a price target of Rs 1,165 per share.

“NIM’s 10.9% was lower than the 11% expected. However, growth in assets under management and operating profit before provisions (PpOP) were in line with expectations,” the brokerage said.

Also read: Muthoot Finance Q3 net profit rises 14% YoY to Rs 1,027 crore

Muthoot Finance has been approved to raise up to Rs 16,000 crore through issue of non-convertible debentures.

In the nine months ended December 31, the company’s standalone loan assets under management (AUM) grew 23% and gold loan AUM grew 22%.

Mr. George Jacob Muthoto, Chairman of the Mutooto Group, said: “We are leveraging strong growth opportunities in affordable housing, microfinance, personal loans and auto finance to increase our subsidiary’s market share to 18 per cent over the next five years. We aim to increase this by 20%.” .

Last week, smaller rival Manappuram Finance reported better-than-expected profits due to growth in its non-gold loan division.

Disclaimer: The views and investment tips expressed by investment professionals on Moneycontrol.com are their own and not the views of the website or its management. Moneycontrol.com advises users to check with certified professionals before making any investment decisions.