Muthoot Microfin CEO Sadaf Sayeed Optimistic About Second Half, Says Worst Is Over
In its Q2 earnings, the microfinance arm of Muthoot Pappachan Group reported a 33 basis point increase in gross NPAs at 2.7% against 2.37% a year ago.
Muthoot Microfin Ltd. is past the worst phase of delinquency and set to perform much better in the second half of the current financial year, according to Chief Executive Officer Sadaf Sayeed.
In its Q2 earnings, the microfinance arm of Muthoot Pappachan Group reported a 33 basis point increase in gross non-performing assets at 2.7% against 2.37% a year ago. The company's net NPA rose 9 bps YoY to 0.97% in Q2.
Speaking to NDTV Profit, Sayeed claimed that Q2 was the peak of the delinquent cycle for the company. “This (Q2) was the peak of the delinquent cycle. I think Q3, and Q4 would be much better traditionally.”
“Also, Q3 and Q4 have traditionally been the most productive quarters for the microfinance industry. And these are the quarters where you can disburse more. And also the collection comes back quite strongly in October despite being a month filled with festivities.”
Pointing out that Muthoot Microfin’s collection in Oct. 2024 remained stable despite the last two days of the month being holidays on account of Diwali, Sayeed said, “I think November is a month, which will be much better and going forward, all the months would be better.”
He expects Q3 and Q4 to be “really positive contributors” to Muthoot Microfin’s bottom line for FY25.
Sayeed said that his company was focused on building a sustainable and resilient business. “That's what we believe in Muthoot, that it has to be a long-term sustainable business. So, from a growth point of view, we have cut our guidance to around 10% to 12%.”
However, the top executive remained confident of surpassing the guidance comfortably, supported by strong fundamentals. “While we have all the fundamentals in place… we will be conservative in terms of our disbursement for the quarter. We will ensure and wait and watch for Q3 and then Q4 should be the normal disbursement. Given that scenario, we will easily surpass the 10-12% guidance that we are giving.”
Sayeed stated that Muthoot will prioritise strengthening its asset and credit quality moving forward.
Shares of Muthoot Microfin Ltd. closed 2.9% lower at Rs 206.50 apiece on the NSE on Wednesday, while the benchmark Nifty 50 closed 1.12% higher at 24,484.05.
