Muthoot Finance Ltd.’s shares extended their decline for the second consecutive day on Wednesday, following the company’s first-quarter profit missing analyst estimates. Despite this, brokerages remain optimistic about the company’s near-term outlook, citing healthy gold loan growth and stronger customer additions.
The company’s net profit rose 10.6% year-on-year to Rs 1,079 crore in the quarter ended June 2024, falling short of the consensus estimate of Rs 1,164 crore. Total income increased 22.6% to Rs 3,710 crore during the period.
Brokerages such as Motilal Oswal and Jefferies have maintained a positive outlook on the company, citing its ability to leverage a positive gold price outlook and low asset quality risk. However, they also noted concerns regarding the potential removal of the RBI’s ban on gold loans for a large gold loan NBFC, which could increase competitive intensity in the gold loan ecosystem.
The stock fell 3.2% to Rs 1,793 apiece, with a total traded volume of 0.68 times its 30-day average. The relative strength index stood at 45.93. Out of the 23 analysts tracking the company, 16 maintain a ‘buy’ rating, four recommend a ‘hold,’ and three suggest ‘sell,’ with an average 12-month consensus price target implying a 9% upside.
