Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Growth outlook remains strong
Muthoot Finance (MUTH) witnessed robust growth in 1QFY12, with gross retail AUM
growing by 97% YoY and 13% QoQ to INR179b.
For FY12, the management has guided gross retail AUM growth of 40-50%. The
QoQ growth trend of 10-12% is likely to continue.
Margins likely to remain stable
In 1QFY12, MUTH reported a margin of 11.2% as compared with 10% in 1QFY11
and 10.86% in FY11. The management does not expect significant margin pressure,
as it has been able to pass on the increase in its cost of borrowings.
The average lending rate currently stands at 21% v/s 19% a year ago.
The withdrawal of PSL status on bank loans to NBFCs and withdrawal of agri loan
status for bank loans to NBFCs for on-lending against gold jewelry has resulted in a
50bp increase in MUTH's cost of borrowings.
Branch expansion plans
The company has added more than 1,200 branches in the last one year and over
260 branches in 1QFY12, taking the total branch network to 3,100+.
MUTH plans to add 700 branches in FY12.
Asset quality likely to remain healthy
Gross NPAs in 1QFY12 remained stable QoQ at 0.3%.
The management expects asset quality to remain healthy, given that the loan to
value (LTV) ratio is comfortable at ~72%.
Given the steep increase in gold prices, MUTH remains cautious and is maintaining
lower LTV, which provides cushion on the asset quality front in case of fall in gold
prices.
Other highlights
The company expects to maintain RoA at 4-4.5%.
Current leverage stands at 6.8-6.9x. The management is comfortable with leverage
of 7.5-8x.
Valuation and view
We believe MUTH is strongly positioned in a niche business segment and has domain
expertise and the required platform to scale up the business to the next level.
However, regulatory uncertainty hovering around for all NBFCs could act as an
overhang in the near term. Not Rated.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaways
Growth outlook remains strong
Muthoot Finance (MUTH) witnessed robust growth in 1QFY12, with gross retail AUM
growing by 97% YoY and 13% QoQ to INR179b.
For FY12, the management has guided gross retail AUM growth of 40-50%. The
QoQ growth trend of 10-12% is likely to continue.
Margins likely to remain stable
In 1QFY12, MUTH reported a margin of 11.2% as compared with 10% in 1QFY11
and 10.86% in FY11. The management does not expect significant margin pressure,
as it has been able to pass on the increase in its cost of borrowings.
The average lending rate currently stands at 21% v/s 19% a year ago.
The withdrawal of PSL status on bank loans to NBFCs and withdrawal of agri loan
status for bank loans to NBFCs for on-lending against gold jewelry has resulted in a
50bp increase in MUTH's cost of borrowings.
Branch expansion plans
The company has added more than 1,200 branches in the last one year and over
260 branches in 1QFY12, taking the total branch network to 3,100+.
MUTH plans to add 700 branches in FY12.
Asset quality likely to remain healthy
Gross NPAs in 1QFY12 remained stable QoQ at 0.3%.
The management expects asset quality to remain healthy, given that the loan to
value (LTV) ratio is comfortable at ~72%.
Given the steep increase in gold prices, MUTH remains cautious and is maintaining
lower LTV, which provides cushion on the asset quality front in case of fall in gold
prices.
Other highlights
The company expects to maintain RoA at 4-4.5%.
Current leverage stands at 6.8-6.9x. The management is comfortable with leverage
of 7.5-8x.
Valuation and view
We believe MUTH is strongly positioned in a niche business segment and has domain
expertise and the required platform to scale up the business to the next level.
However, regulatory uncertainty hovering around for all NBFCs could act as an
overhang in the near term. Not Rated.
No comments:
Post a Comment