Buy Muthoot Finance, target Rs 550: Phillip Capital (India)

Phillip Capital (India) has a buy call on Muthoot Finance with a target price of Rs 550.

The current market price of Muthoot Finance is Rs 515.6.

Time period given by the brokerage is one year when Muthoot Finance price can reach the defined target.


Investment rationale by the brokerage: The operational performance was broadly in line. MUTH resorted to a cut in LTV to temper the disbursement run rate – in order to keep adequate liquidity at hand. However, with liquidity back to normal, LTVs have been restored. We maintain gold AUM growth estimate at 15 per cent for FY19. Moreover, higher growth in its non-gold book should provide a cushion to overall AUM growth. At CMP, the stock is trading at 1.8x FY20 BV with an RoA of 5.6 per cent and RoE of 22 per cent. Maintain BUY with a target of Rs 550 (unchanged).