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Muthoot Finance: Cap on LTV is testing time for the industry
` RBIs cap on LTV of gold loans will impact growth and margins
` Challenges in the transition
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily22032012.pdf
Cap on LTV is testing time for the industry. The RBI has capped the loan-to-value
(LTV) ratio for gold-loan NBFCs at 60%. This is lower than the average LTV of 67% for
Muthoot Finance. We believe the company will need to trim its business to comply with
the new regulation. While it is challenging to estimate the impact (since we don’t have
an LTV-wise break-up of the loan book), we highlight likely scenarios and sensitivity to
loan book and margins. We will review our rating and estimates after we obtain more
details from the management.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Muthoot Finance: Cap on LTV is testing time for the industry
` RBIs cap on LTV of gold loans will impact growth and margins
` Challenges in the transition
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily22032012.pdf
Cap on LTV is testing time for the industry. The RBI has capped the loan-to-value
(LTV) ratio for gold-loan NBFCs at 60%. This is lower than the average LTV of 67% for
Muthoot Finance. We believe the company will need to trim its business to comply with
the new regulation. While it is challenging to estimate the impact (since we don’t have
an LTV-wise break-up of the loan book), we highlight likely scenarios and sensitivity to
loan book and margins. We will review our rating and estimates after we obtain more
details from the management.
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