The gold financing company pisted its June quarter results on Wednesday
Shares of gold financing company Muthoot Finance dropped more than 6 per cent in Thursday’s trading, a day after it declared its June quarter results. The scrip opened at Rs 1,250 per share, as compared to the previous closing mark of Rs 1,256 and continued to decline in early trade as it hit an intra-day low of Rs 1,180, a fall of 6.05 per cent. At 12:35 pm, the stock was down 5.30 per cent at Rs 1,189.55.
For the quarter ended June 2020, Muthoot Finance posted a 53.46 per cent rise in its consolidated net profit at Rs 853.51 crore against Rs 556.19 crore in the year-ago period. Sales rose 25.96 per cent to Rs 2,604.48 crore in the quarter ended June 2020 as against Rs 2,067.67 crore in the corresponding quarter of the previous fiscal.
In a note on Wednesday, brokerage firm Motilal Oswal Institutional Equities said that even as the company missed its total income expectations by 8 per cent, it was offset by lower operating costs. It also noted that Muthoot Finance witnessed more collections than disbursements during the quarter, resulting in a decline in loan book. However, online disbursal during the lockdown has picked up, Motilal Oswal noted.
“Demand for gold loans picked up in July – August 2020, and we expect it to sustain given the tough economic environment,” the note further said.
As for the fundamentals, the brokerage firm said, “Over the past year, Muthoot Finance has increased liquidity on the balance sheet from 3 per cent of loans to 20 per cent of loans, which is comforting. However, this is likely to be a drag on margins going ahead. While its subsidiaries have witnessed improving collection efficiency, we remain cautious about the asset quality outlook,” the brokerage said. It has a “Neutral” rating on the stock with the target price of Rs 1,300.
