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Motilal Oswal Report
Muthoot Finance Ltd.'s profit after tax (in-line) grew by 11% YoY and 2% QoQ to Rs 9.94 billion.
Despite higher-than-estimated provisions, lower-than-estimated interest expenses and benefits of lower operating expenses led to an in line performance.
It posted an operating expense beat of 6% – opex declined by 2% YoY, but grew 10% QoQ to Rs 4.4 billion. The cost ratio declined by 80 basis points YoY to 3.3%.
Pre-provision operating profit (3% beat) grew by 17% YoY and 6% QoQ to Rs 14.14 billion.
Gross stage-III increased by 63 bps QoQ to 1.85% in Q2 FY22.
We expect Muthoot Finance to deliver standalone assets under management growth of ~17%/14% in FY22E/FY23E.
Return on asset/return on equity is likely to remain robust (6%/23%) over the medium term.
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