IDBI Capital maintains buy on Muthoot Finance, target price Rs 875

IDBI Capital has maintained ‘buy’ rating on Muthoot Finance with a target price of Rs 875. Given the challenging environment, management is targeting a decent growth of 15% in its core gold loan book for FY20. Further, limited funding from banks owing to uncertainty around NBFCs is not going to be a problem for Muthoot in the second half, given it is now borrowing from diversified sources. All subsidiaries are witnessing healthy growth except home finance, accounting for 12% of the loan book. Shares of Muthoot closed at Rs 873, up 17%.