Morgan Stanley has upgraded Muthoot Finance to overweight from its earlier stance and raised the target price to ₹2,920 after the company delivered results that substantially beat consensus estimates. The brokerage cited Muthoot’s group-leading return on equity (ROE) and earnings per share (EPS) growth as key drivers for the upgrade, along with negligible asset quality risk even as bad loans are expected to rise across the broader group.
According to Morgan Stanley, the upgrade is also supported by the likelihood of ongoing consensus earnings upgrades for Muthoot Finance, in contrast to cuts being made for peers within the financial sector. The brokerage believes the company’s asset quality resilience positions it favourably in an environment where non-performing assets in the sector are expected to increase.
Muthoot Finance’s strong profitability metrics, combined with its ability to maintain asset quality, have reinforced the brokerage’s confidence in its growth trajectory. Morgan Stanley noted that the gold loan financier’s consistent performance in delivering high returns, coupled with limited credit risk, provides an attractive risk-reward proposition for investors at current valuations.
Disclaimer: The views and recommendations made in this article are those of Morgan Stanley. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
