Muthoot Finance: The cracker for this Diwali The largest Gold Financing Company in India has been proving itself to be a real Diwali cracker. Muthoot finance share price has almost doubled in one year. The company has posted a stunning first quarter grabbing the attention of the Street and is expected to stun again with its best ever second quarter performance.
The Quarter Show: The company registered 48% increase in net profit of, at Rs. 270 crores for the quarter ended June 2016 as compared to Rs. 183 crores in last year. Retail loans displayed an increase of Rs. 1481 crores during the quarter in comparison to Rs. 1000 crores in last year translating to an increase in growth rate by 48%. AUM has improved by 6% at 25860 crores at the end of June 30, 2016 as compared to 24409 crores last year. CRISIL has upgraded long term debt rating of Muthoot Finance from AA-/STABLE to AA/ Stable. Long term debt rating covers debt instruments of over one year while short term debt rating is for debt instruments of up to one year. Under CRISIL rating scale, AA rating will come under â€˜High Safetyâ€™ category and carries very low credit risk. Under short term debt rating, Muthoot Finance already has peak rating from CRISIL with A1+ rating which is considered to have very strong degree of safety and has lowest credit risk. The company is expected to post one of its best quarters on the back of strong gold prices. Ananlyts said Margins are projected to improve year-on-year on better auction realization, increase in lending rates and falling funding costs. The net interest income (NII) is expected to grow 31 per cent Year on Year in September quarter.
Other Muthoot Stories: The Gold Loan king will be raising Rs. 500 crores via NCDs during the second week of November in this financial year. Earlier this year, the company had raised a similar amount through NCDs while last financial year the company raised a total of 1,239 crores via three public issues of NCDs. The company also joined hands with TechProcess payment services to facilitate customers repay their loan EMIs digitally. The platform is a single integration omni-channel payment solution attuned to online and mobile channels. TechProcess' Next Gen Digital Payments Platform is a multi-mode payment ground which is interoperable with more than 185 payment modes including credit and debit card, net-banking e-wallets and the likes.
Shareholding pattern: The company has the highest percentage of Indian Promoters holding stake in the company. Public shareholders own 25%, Institutions hold 21% and non-institution own 4% stakes. Category & Name of the Shareholders
Promoter & Promoter Group Indian Public Institutions Non Institution
No. of shareholder
No. of fully paid up equity shares held
13 13 38596 242 38354
297797872 297797872 101253062 85197512 16055550
74.63 74.63 25.37 21.34 4.03
56 MF schemes are invested in the company. There is 14.5% shareholding by FPIs where Goldman Sachs own 1.55% stakes.
Category & Name of the Shareholders
No. of shareholder
Total no. shares held
Institutions Mutual Funds Reliance Capital Trustee Company Limited A/C Reliance Growth Fund Birla Sun Life Trustee Company Private Limited A/C Birla Sun Life Frontline Equity Fund
242 56 1
85197512 27461961 6200000
21.34 6.88 1.55
Financial Institutions/ Banks Foreign Portfolio Investors Goldman Sachs India Limited Gmo Emerging Domestic Opportunities Fund A Series Of Gmo Trust
2 184 1 1
16033 57719518 6166482 4662577
0 14.46 1.55 1.17
Dynamic Levels recommend BUY in Muthoot Finance at the price range of 340-345 with the Target of 420 as the largest Gold financing Company is aiming at enormous expansion. Muthoot Finance is a Multibagger recommendation as the price has more than doubled from recent low of 140 to 400. It has strong track record of generating superior shareholder returns, higher than the benchmark indices.
Disclaimer The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision. Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
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Do not have any financial interest / any actual/beneficial ownership in the subject company. Do not have any other material conflict of interest at the time of publication of the research report Have not received any compensation from the subject company in the past twelve months Have not managed or co-managed public offering of securities for the subject company. Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the subject company, nor engaged in market making activity for the subject company Have not served as an officer, director or employee of the subject company
Article Written by Tanaya Nath