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Muthoot Finance stock soars 5%, but analysts wary on margin.

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TLDR: Muthoot Finance stock surged 5% following strong Q3 results, but analysts are cautious about the company’s margin outlook. The stock has declined over 6% in the past month.

Analysts at CLSA have given Muthoot Finance an “underperform” rating, with a target price of Rs 1,440 per share.

Muthoot Finance, a gold financer, reported strong Q3 results, leading to a 5% surge in its stock price. However, analysts remain cautious about the company’s margin outlook. The stock has declined over 6% in the past month, underperforming the benchmark Sensex.

The company reported a 15% increase in its consolidated net profit for Q3, reaching Rs 991 crore. The gold loan AUM also increased by 24% to Rs 59,984 crore. However, analysts are concerned about the rise in the cost of funds, which could impact the company’s margins in the future.

CLSA, a global brokerage firm, has given Muthoot Finance an “underperform” rating and set a target price of Rs 1,440 per share. The firm believes that the company’s margins could be under pressure due to the increase in competition and the rise in the cost of funds.

In addition to the margin outlook, analysts are also concerned about the company’s asset quality and the impact of stricter regulations on the gold loan sector. Despite these concerns, some analysts believe that Muthoot Finance will continue to benefit from the strong demand for gold loans, especially in rural areas.

Muthoot Finance is one of the largest gold loan companies in India, with a network of over 5,000 branches across the country. The company provides loans against gold ornaments, gold coins, and gold bars.

Overall, while Muthoot Finance’s Q3 results were positive, analysts remain cautious about the company’s margin outlook and the impact of stricter regulations on the gold loan sector. The stock has declined over the past month, underperforming the benchmark Sensex.

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