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Informist, Tuesday, Oct. 22, 2024

By Vaishali Tyagi 

MUMBAI - Muthoot Finance Ltd.'s net profit is expected to jump 27.9% on year to INR 12.67 billion in Jul-Sept, driven by a rise in its gold loan book, according to an average of estimates from seven brokerage firms. Sequentially, the profit is estimated to rise 17.5% from a record high of INR 10.79 billion in Apr-Jun, which was on the back of strong growth in assets under management.

The estimates for net profit were in the range of INR 12.04 billion to INR 13.35 billion. "We expect loan book growth to remain strong at 5% on-quarter (2-11% on quarter in the previous four quarters), reflecting 5% rise in gold prices and market share gains," Kotak Institutional Equities said. The company is yet to announce a date for its earnings announcement. 

Net interest margin is likely to fall another 13-20 basis points on quarter due to rising cost of funds, brokerages said. In the quarter ended June, the net interest margin was 11.51%, slightly down from 11.62% a quarter ago. 

The interest spread, or the difference between interest income on average loan assets and interest expense on average borrowings, eased to 9.52% in Apr-Jun. from 9.76% in Jan-Mar. For the quarter ended June, Muthoot Finance's interest income rose 23.61% on year to INR 36.56 billion.

Motilal Oswal expects the lender's gold assets under management to see a growth of around 4% on quarter. As of Jun. 30, the gold financier's gold loan assets under management rose to INR 809.22 billion from INR 660.39 billion a year ago. The lender's loan assets under management rose 25% on year to a record high of INR 843.24 billion as of Jun. 30.

As per brokerages, credit cost-to-asset under management is likely to remain moderate at 3.3% in Jul-Sept, as against 3.2-3.7% in the previous four quarters, reflecting favourable conditions for the business. 

Analysts look forward to the lender's guidance on gold loan growth, microfinance and home finance segments, as well as its margin guidance and asset quality. On Tuesday, the company's shares ended 1.8% lower at INR 1,910.50 on the National Stock Exchange.  

Following are the Jul-Sept earnings estimates for Muthoot Finance from seven brokerages:

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Edited by Vandana Hingorani 

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