Brokerage firms expect Muthoot Finance’s stock to perform well. The company has announced the results for the March quarter. On a year-on-year basis, its consolidated net profit grew by 52.4 per cent to Rs 835.78 crore. The company has benefited from the interest of customers in gold loans. On Thursday, the company’s stock showed a great rise. At around 1:30 pm, the stock was up 13 per cent at Rs 1132.
The branch network of Muthoot Finance is excellent. Liability profile diarsified and return ratio is very good. Due to this, the market interest in its stock has increased. The company derives most of its revenue from gold loans. It also has a presence in the vehicle finance, home finance and micro loan segments. The company provides these services through its subsidiaries.
Antique Broking has given a ‘Buy’ rating on Muthoot’s stock. This means that he has advised to buy this stock. He has given a target price of Rs 1180 for the stock. He has said, “Business growth has been good. On a year-on-year basis, volume and price growth has been 4 per cent and 21 per cent respectively. This growth in the midst of the epidemic shows strong demand. To earn the company’s profits. Capacity has also seen improvement. “
Muthoot Finance shares have more than doubled in the last three months. On March 24, the share price was Rs 477.50. On June 18, it has reached Rs 1,095. This is its highest price of 52 weeks. In this way, this stock has given 130 per cent returns in about three months. This means that if you had invested one lakh rupees in this stock at the end of March, today your money would have increased to more than two lakh rupees.
According to the Reserve Bank of India (RBI) rules, the loan-to-value (LTV) ratio in gold loans can be up to 75 percent. This means that the company can lend up to 75 percent of the value of gold. The LTV ratio of Muthoot Finance’s outstanding loan book is 52 per cent and the LTV ratio on origination is 70 per cent. If gold prices fall by up to 10 percent, it will not have much effect on the company’s loan book or profit earning potential. Some customers can default if the price of gold falls more than 10 percent. This may cause the company to suffer a loss in interest income. However, his principal will not be affected.
Nirmal Bang Securities has advised to buy Muthoot Finance shares. He has given a target price of Rs 1,173 for its shares. The brokerage firm said, “Balance sheet liquidity remained high in the March quarter. Cash accounted for 11 per cent of total assets. Last year, cash accounted for 5 per cent of total assets and 6 per cent in the previous quarter.”