Gold financiers are witnessing robust growth momentum, prompting CLSA to upgrade Muthoot Finance to ‘Outperform’ from ‘Hold’ and raise its target price to ₹2,400 per share. The brokerage has also reiterated its ‘Outperform’ rating on Manappuram Finance, increasing its target price to ₹225 per share.
According to CLSA, the gold loan segment has seen strong traction in the first nine months of FY25, with banks reporting a remarkable 70% year-on-year growth in this category as of December 2024, led by State Bank of India (SBI). This surge in demand has directly benefited Muthoot Finance and Manappuram Finance, as restrictions on competing players have allowed these companies to gain market share.
The brokerage believes that the positive trend in the gold financing sector is likely to continue, given that demand remains strong amid higher gold prices and a growing preference for short-term secured loans. Both Muthoot and Manappuram have capitalized on this opportunity, leveraging their extensive branch networks and robust risk management frameworks.
With the gold loan market expanding rapidly, CLSA anticipates continued earnings momentum for the top players, making Muthoot Finance and Manappuram Finance attractive investment picks in the NBFC space.
