Buy Muthoot Finance, target price Rs 1509: ICICI Securities

ICICI Securities has buy call on Muthoot Finance with a target price of Rs 1509. The current market price of Muthoot Finance is Rs 1116.1. Time period given by analyst is one year when Muthoot Finance Ltd. price can reach defined target.

Muthoot Finance Ltd., incorporated in the year 1997, is a Large Cap company (having a market cap of Rs 44461.03 Crore) operating in NBFC sector.

Muthoot Finance Ltd. key Products/Revenue Segments include Interest, Income From Sale Of Share & Securities, Service Charges, Sale of services and Dividend for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 3041.14 Crore, down -4.01 % from last quarter Total Income of Rs 3168.09 Crore and down -2.50 % from last year same quarter Total Income of Rs 3118.98 Crore. Company reported net profit after tax of Rs 1006.22 Crore in latest quarter.

Investment Rationale
The brokerage maintains BUY rating on the stock with a revised target price of Rs1,509 (earlier: Rs1,819) based on 2.5x (3x earlier) P/B on FY24E book value for gold business and 1.0x for other businesses to underline the inherent low credit cost, high RoE nature of business further boosted by Muthoot’s high operating efficiency, industry leadership and execution track record. It expects consolidated RoA/RoE of 4.8%/18.7% in FY23E and 5.4%/19.9% in FY24E, respectively. The cut in multiples is a result of the clouded outlook on yields and growth.

Promoter/FII Holdings
Promoters held 73.37 per cent stake in the company as of 31-Mar-2022, while FIIs owned 12.13 per cent, DIIs 9.68 per cent.