Fundamental Analysis

MUTHOOT FINANCE LTD. 

Ticker : 533398
BUY: Rs 712
Target: Rs 800 

Muthoot Finance Limited is a non-banking financial company (NBFC) which is engaged in providing loans against collateral of gold jewellery, also known as gold financing. On the consolidated financial front, for Q2FY20, the company reported net sales of Rs 2,397.38 crore, an increase by 31.86 per cent from Rs 1,818.09 crore for Q2FY19. PBDT expanded by 41.41 per cent to Rs 1,129.48 crore for Q2FY20 from Rs 798.73 crore in Q2FY19. The company gained a net profit of Rs 908.54 crore, clocking a growth of 76.39 per cent compared to the net profit of Rs 515.06 crore gained in Q2FY19. Recently, the company entered into an agreement to acquire IDBI Asset Management Limited and IDBI MF Trustee Company Limited thus foraying into the mutual fund asset management space. Based on strong AUM growth and uptick in gold prices leading to improved demand, we recommend a BUY.