Muthoot Finance Q3 Results Review -NIMs Stable; Robust Gold Loan Growth Sustained: IDBI Capital

IDBI Capital Report

Muthoot Finance Ltd.'s gold portfolio growth remain strong at 22% YoY (up 2.5% QoQ) led by higher gold prices. Overall assets under management growth sustained at 23% YoY (versus 21% YoY Q2 FY24). Management maintained AUM growth guidance of 15% growth for FY24.

Muthoot Finance's net interest margins remain stable QoQ led by higher yields. Stability of NIMs remains important going forward due to competitive intensity. Net interest income grew by 2.5% QoQ led by stable margins; pre-provision operating profit grew by 4% QoQ led by lower operating expenses (down 1% QoQ).

Provisions increased by 14% QoQ led by higher auctions; profit after tax grew by 4% QoQ. Stage III loan assets improved to 3.6% versus 4.3% QoQ, due to higher auctions (Rs 3.8 billion).

We have moved to FY26 estimates and maintain ‘Hold’ rating with a new target price of Rs 1,550 (earlier Rs 1,300), valuing it at two times price/adjusted book value FY26E (pre-Covid average price/book value).

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