InvestorQ : How do you see the Muthoot Finance stock after the latest results?
Arya Nanda made post

How do you see the Muthoot Finance stock after the latest results?

Anjana Aiyar answered.
9 months ago

Muthoot Finance reported 52% rise in net profit at Rs.858 crore in the midst of tough operating conditions. Even total income was up by nearly 26% on a YOY basis at Rs.2607 crore in the Jun-20 quarter. It more than made up for the disruption.

Muthoot saw its gross loan assets increase by 16% at Rs.46,501 crore largely driven by its core gold lending business. Additionally, Muthoot also has a smaller presence in home loan financing, micro-lending and insurance broking, apart from a small presence in Sri Lanka.

It may be recollected that the branches of Muthoot Finance were completely shut during the month of April due to the government guidance on lockdown due to the pandemic. However, it partially compensated by up-scaling digital platforms with incentives.

Post the lockdown, Muthoot Finance has seen a surge in gold loans as it is the most convenient way to avail short term and immediate working capital assistance for small businesses, growing entrepreneurs and traders. Its gold loan portfolio grew by 15%.

Muthoot as seen significant increase in disbursements in June, July and August and that is likely to be eloquently reflected in the September quarter performance. It is also currently comfortable with a liquidity buffer of Rs.8477 crore as cash and short term securities.

Interestingly, the company has reported that despite the anticipated rise in financial stress, the collections in non-gold loan portfolio significantly improved. That may be the good news and the portent of things to come.