Muthoot Finance Q1 Results Review - A Strong Show: Yes Securities

Yes Securities Report

Muthoot Finance Ltd. delivered a much stronger-than-expected operational performance in Q1 FY25, manifested in 3%/7% beat on net interest income/pre-provision operating profit despite much lower DA income in Belstar MFI.

The operational beat essentially came from consolidated loan growth being 10% QOQ as against our/market expectation of 5-6%. Large growth surprise came in the mainstay gold loans business (82.5% of consolidated assets under management) wherein portfolio increased by 11% QoQ on the back of 4%/3% growth in active customers/tonnage and 6%/7% growth in avg. loan ticket/average loan per customer.

The improvement in customer activity (22.5% QoQ growth in new customer acquisition and 6% QoQ growth in volume of inactive customer activation) was driven by-

1. increase in gold loan demand,

2. absence of IIFL,

3. some moderation in competition from banks and

4. lesser availability of unsecured credit to borrowers.

Belstar MFI AUM (10% of consolidated AUM) marginally declined in Q1 FY25 underpinned by a cautious disbursement stance amidst increase in delinquencies.

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