Muthoot Finance Skyrockets: All-Time Highs Hit After Stellar Q2 Earnings Beat!

Author

Simar Singh | Whalesbook News Team

Detailed Coverage:

Muthoot Finance Ltd. witnessed a significant 10% jump in its share price on Friday, November 14, reaching fresh all-time highs. This rally followed the release of its strong September-quarter (Q2 FY25) financial results.

Key Financials: The company reported an all-round performance with expanding net interest margins (NIMs), steady loan recoveries, and robust Assets Under Management (AUM) growth of 46.7% year-on-year (YoY) and 10.2% quarter-on-quarter (QoQ), reaching ₹1.32 lakh crore. Profit after tax (PAT) saw an impressive surge of 87.4% YoY and 14.6% QoQ. Net Interest Income grew 58.5% YoY, and pre-provision operating profit (PPOP) jumped 70.5% YoY. Provisions decreased by 44.9% YoY. A ₹300 crore recovery gain significantly contributed to increased interest yields and PAT.

Management Outlook: Muthoot Finance revised its AUM growth guidance upwards for FY26 to 30-35%, from the earlier 15%. They expect steady-state yields around 18-18.5%. The company also highlighted improving trends in its microfinance arm, Belstar Microfinance, where losses narrowed significantly.

Brokerage Views: Brokerage firms are optimistic. CLSA maintained an 'Outperform' rating with a target price of ₹4,000, projecting a 25% AUM CAGR. Jefferies reiterated its 'Buy' rating with a ₹4,000 target, expecting further NIM expansion and easing credit costs, forecasting a 36% EPS CAGR and over 24% ROE.

Impact: This news has a positive impact on the Indian stock market, particularly the financial services and NBFC sectors, demonstrating strong performance and growth potential. Impact Rating: 8/10

Definitions: • AUM (Assets Under Management): The total market value of all assets that a person or entity manages on behalf of clients. For Muthoot Finance, it represents the total value of gold loans outstanding. • NIMs (Net Interest Margins): The difference between the interest income generated by a financial institution and the interest paid out to its lenders, expressed as a percentage of its interest-earning assets. • NPA (Non-Performing Asset): A loan or advance for which the principal or interest payment remained overdue for a specified period. • PPOP (Pre-Provision Operating Profit): Profit generated from a bank's normal business operations before setting aside money for loan loss provisions. • PAT (Profit After Tax): The profit remaining after all expenses, taxes, and other deductions have been subtracted from total revenue. • CAGR (Compound Annual Growth Rate): The mean annual growth rate of an investment over a specified period of time longer than one year. • EPS (Earnings Per Share): A company's net profit divided by the number of common shares it has outstanding. • ROE (Return on Equity): A measure of financial performance calculated by dividing net income by shareholders' equity.