Muthoot Finance Snaps Losing Run as CEO Sees Little Protest Pain
A dispute demanding higher wages has disrupted business at Muthoot’s Kerala branches, posing a key risk for the firm.
(Bloomberg) -- Muthoot Finance Ltd. shares rose by the most in two weeks after managing director George Alexander Muthoot said protests by employees in the Indian company’s home state of Kerala will have little impact on business.
“Business in Kerala is currently only 4.5%” of the companies’ overall portfolio, said Muthoot in an analyst call on Monday morning, adding that the closing of 43 branches won’t “have any impact on the performance of our business.”
The stock rose as much as 2.5%, the most in two weeks. Shares of the lender, which takes gold as collateral, had fallen in five out of the previous seven days of trading amid a months-long protest by employees demanding higher wages. The dispute has disrupted business at Muthoot’s Kerala branches, posing a key risk for the firm.
Read: Muthoot Finance Drops Most in Over Three Weeks on Labor Protest
“Management made clear that closing branches in its home state is not going to impact profitability,” said Digant Haria, an analyst at Antique Stock Broking. “As a gold loan provider, Muthoot Finance doesn’t face as much liquidity risk as non-bank finance companies that borrow more from the market.”
To contact the reporters on this story: Ronojoy Mazumdar in Mumbai at rmazumdar7@bloomberg.net;Rahul Satija in Mumbai at rsatija1@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Margo Towie, Anto Antony
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