Mehabe score: 6 G Factor: 6 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 6 and Piotski score of 4.
Description
Muthoot Finance is engaged in the business of diversified interests in the fields of Financial Services, Healthcare, Real Estate, Plantations, Foreign Exchange, Information Technology, Education, Insurance Distribution, Hospitality etc.
Main Points
Fast growth period (FY07-FY13)
Due to rapid increase in gold prices, Muthoot grew their branch network >7.4x in a period of 6-years, from 551 branches in FY07 to 4,082 in FY13. During this period, AUM grew at >62% CAGR reaching 26,000 Cr. in FY13 from 1,420 Cr. in FY07. Gold tonnage increased to 134 ton in FY13 from 23 ton in FY07.Site:MUTHOOTFINMain Symbol:MUTHOOTFIN
Stock trades at 1584.0, above its 50dma 1491.13. It also trades above its 200dma 1301.45. The stock remains bullish on techicals
The 52 week high is at 1638.85 and the 52week low is at 1000.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 36.11% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.95%
– has been maintaining a healthy dividend payout of 21.13%
Weakness
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Competition
– The industry trades at a mean P/E of 25.5x. SBI Cards trades at the industry’s max P/E of 108.34x. MUTHOOTFIN trades at a P/E of 16.7x
– Industry’s mean G-Factor is 3.1 while the mean Piotski score is 7.0. MUTHOOTFIN has a G-Factor of 6 and Piotski scoreof 4.
– Average 1 month return for industry is 4.0%. The max 1- month return was given by Bajaj Finserv: a return of 13.1 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 3104.0 cr compared to Rs 2630.0 cr for period ended Mar 2020, a rise of 18.0%
Operating Profits reported at Rs 2442.0 cr for period ended Mar 2021 vis-vis 2006.0 for period ended Mar 2020 .
Operating Margins expanded 239.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 25.42 compared to Rs 25.05 for previous quarter ended Dec 2020 and Rs 20.68 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 11531.0 cr for period ended Mar 2021 vis-vis sales of Rs 9684.0 cr for the period ended Mar 2020, a healthy growth of 16.0%. The 3 year sales cagr stood at 19.8%.
Operating margins expanded to 80.0% for period ended Mar 2021 vis-vis 77.0% for period ended Mar 2020, expansion of 300.0 bps.
Net Profit reported at Rs 3804.0 cr for period ended Mar 2021 vis-vis sales of Rs 3138.0 cr for the period ended Mar 2020, rising 17.5%.
Company recorded a healthy Net Profit CAGR of 27.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 28.0% compared to 27.0% over the last 3 Years. – The stock has given a return of 33% on a 1 Year basis vis-vis a return of 56% over the last 3 Years. – The compounded sales growth on a TTM bassis is 19% vis-vis a compounded sales growth of 20% over the last 3 Years. – The compounded profit growth on a TTM basis is 21% vis-vis a compounded profit growth of 28% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 15.02% vis-vis 15.99% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 3.86% vis-vis 4.02% for Mar 2021
Conclusion
– has delivered good profit growth of 36.11% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.95%
– has been maintaining a healthy dividend payout of 21.13% –
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 1491.13 and is trading at 1584.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
