MOSL: MUTHOOT FINANCE (Neutral)-Stable operating performance, but liquidity remains tight
Muthoot Finance: Stable operating performance, but liquidity remains tight
(MUTH IN, Mkt Cap USD3.4b, CMP INR600, TP INR630, 5% Upside, Neutral)
- 1QFY20 PAT grew 8% YoY to INR5.3b (in-line), driven by stable loan growth, decline in margins and modest sequential increase in GNPLs.
- Standalone AUM increased 5% QoQ/16% YoY to INR358b, in line with the trend witnessed over the past few quarters. Consol. AUM grew faster at 18% YoY to INR402b, driven by stronger growth in subsidiaries.
- yields declined 130bp QoQ/50bp YoY to 21.2% - the company offered some low-rate schemes during the quarter. Cost of funds increased 30bp YoY (largely stable QoQ) to 9.3%. The borrowing mix was largely stable with banks/NCDs comprising 49%/31% of total borrowings. Management commented that as banks are not increasing limits to most NBFCs, MUTH is looking to raise money via retail NCDs.
- Operating expenses grew only 6% YoY, leading to 50bp reduction in the expense ratio (calc.) to 4.5%.
Muthoot Finance Limited is a gold financing company. The Company is a non-banking financial company (NBFC), which is engaged in providing loan (financing) against collateral of gold jewelry. The Company operates through two segments: Financing and Power Generation. The Company provides personal and business loans (secured by gold jewelry) primarily to individuals having no access to formal credit for a reasonable tenure to meet their short-term working capital requirements. The Company offers gold loans, foreign inward money transfer services, foreign exchange services, insurance broking, home loans, personal loans, collection services, microfinance, wind mill power generation, white label automated teller machine, instant money transfer services and domestic money transfer services. The Company has a network of approximately 4,294 branches all over India. In Sri Lanka, the Company offers corporate loans, mortgage loans, factoring, business loan and short term loans, among others.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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