Muthoot Finance: Why it is a long-term sell

If the gold-loan company tries to recoup growth, it will come at the cost of margin, given the competitive intensity

Madhuchanda Dey
November 14, 2022 / 09:40 AM IST
Muthoot Finance: Why it is a long-term sell

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PRO Only Highlights
-  Quarterly performance largely backed by improved realisations
-  Medium-term triggers China plus and protectionist measures for tyre industry
-  Valuations not inexpensive; but improved medium-term outlook

Highlights No improvement seen post the withdrawal of teaser rate loans Struggling to grow Interest margin continues to stagnate Competition from banks cannot be wished away Subsidiaries still not meaningful to offset the decline in core business Stock remains a sell in view of the falling return ratios and lower earnings trajectory We had argued about the remote possibility of Muthoot Finance (CMP: Rs 1,074 Market Cap: Rs 43,112 crore) regaining its lost lustre, given the challenges of growth versus margin protection. We had last recommended...