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ICICI Securities Report
Stable yields and assets under management growth have incrementally put the gold loan business on a much better footing. This will potentially bolster support from higher gold prices and weaker growth in unsecured loan segment.
Non-gold businesses have also performed well for gold non-banking financial companies, which essentially opens up structural growth opportunities beyond gold for these players.
We recommend 'Buy' (unchanged) on Manappuram with a revised target price of Rs 220 (prior: Rs 190), and 'Buy' (upgrade from Add) on Muthoot with an unchanged target price of Rs 1,605.
We see possible resurfacing of competitive intensity pressuring growth or net interest margins as a key risk in gold while worsening asset quality is the risk in non-gold segment.
In this report, we also lay out the detailed commentaries from lenders on gold loans, and the historical correlation between gold AUM and price for Muthoot Finance Ltd./Manappuram Finance Ltd.
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