Muthoot Finance could achieve 10% loan book growth in FY23: MD

“If you look at quarter over quarter, last quarter over this quarter, there’s an increase (of 9.3%) in net profit. If you compare last year to the same quarter, yes, I would say that ‘there’s a 10% increase This happened because two quarters ago we started the low interest program on a trial basis We did it for one or two quarters , then we stopped it. The impact of this low interest rate program is what we saw as a drop in net profit last quarter and this quarter as well,” the CEO said.

He said the impact is diminishing now as you can see the improvement in the earnings numbers compared to sequential order.

“I think we’re on the road to improvement and you should see that (increased earnings) coming back over the next couple of quarters. We’re on track to get there and the outlook for business growth on the ‘full year were 10% and we continue to maintain this guidance,’ Muthoot said.

Moreover, the growth is also affected as there is a lot of competition in the market not only from NBFCs but also from banks, the official said.

“And of course we are designing ways to return to growth over the next two quarters.”

“Our portfolio of vehicle finance and personal loans and other businesses also started to grow. But the proportion is very low, at less than 10%. But then it also starts to grow. Now people have options for other loans such as home, personal and vehicle loans, etc,” Muthoot said in an interview with PTI.

Demand in other verticals is expected to increase as the economy has fully opened up, Muthoot said.

“Over the past few quarters, the economy has started to improve. Nothing is closed now whether it is the hotel sector, education, cinema or other, economic activity is doing better. Demand is therefore rising. And I think… there’s more buying power in people’s hands,” he added.

“Also over the next month, we plan to raise another ₹300 crore through NCD retail,” the company’s managing director said.

The company’s Gross Loan Assets Under Management (AUM) as of September 30, 2022 was Rs 57,230.30 compared to Rs 55,146.80 in the same period last year. Of this amount, the AUM for gold loans was ₹56,501.40 crore as opposed to ₹54,682.10 crores a year ago. At the end of September 2022, Muthoot Finance has 177 tonnes of gold jewelery on board as collateral.

As of Q2FY23, the company reported total revenue of ₹2841.9 Cr compared to ₹3064.8 crore Cr at Q2FY22 and ₹2804.30 Cr posted in Q1FY23, representing a decline of 6% YoY but a gain QoQ of 1%. The company recorded a net charge of ₹1635.1 crores in Q2FY23 vs. ₹1713.2 crores in Q2FY22 and ₹1692.4 crores posted in Q1FY23, representing a decline of 1% YoY and a fall of 3% QoQ. The company reported a profit after tax (PAT) of ₹901.6 crores in Q2FY23 vs. ₹1002.9 crores in Q2FY22 and ₹825 crore posted in the first quarter of FY23, representing a decline of 13% YoY and a gain QoQ of 9%. The company reported EPS of ₹22.22 per share at Q2FY23 vs. ₹20.41 at T1FY23 and ₹24.98 released at T2FY22.

The organization, which has a presence in 29 states and union territories, has over 4,600 branches across India and serves over 2 lakh consumers daily. As of September 30, 2022, the company has a market value of ₹41,751.40 crore. Muthoot Finance holds the highest rating among gold lending companies. It has a short-term rating of CRISIL A1+ and ICRA A1+ for commercial paper, ICRA A1+ for bank loans while it has a long-term rating of CRISIL AA+/Stable, ICRA AA+(Stable) for subordinated debt, CRISIL AA+/Stable, ICRA AA+ (Stable) for NCD and ICRA AA+ (Stable) for bank loans.

(With PTI entries)