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Motilal Oswal: Muthoot Finance Logs Muted Q1 Business; Liquidity On Balance Sheet Increasing  

Motilal Oswal: Muthoot Finance Logs Muted Q1 Business; Liquidity On Balance Sheet Increasing

An employee of Muthoot Finance Ltd. counts Indian one hundred rupee banknotes in a branch in New New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)
An employee of Muthoot Finance Ltd. counts Indian one hundred rupee banknotes in a branch in New New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

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Motilal Oswal Report

Muthoot Finance Ltd.’s Q1 FY21 profit after tax increased approximately 60% YoY to Rs 8.4 billion (2% miss).

While total income missed our expectations by 8%, it was offset by lower opex and credit costs. However, according to management, the cost reduction is one-off and unlikely to sustain.

As the company opened branches in May 2020, it witnessed more collections than disbursements. Hence, its loan book declined marginally QoQ.

Subsidiary performance: Muthoot Finance took Rs 320 million Covid-19 provisions for non-gold portfolio in Q1 FY21.

Muthoot Home finance’s asset under management stood at Rs 19.8 billion (flat QoQ/YoY) while profit after tax for the quarter was only Rs 4 million.

Belstar Microfinance Ltd. investment and finance loan book was sequentially flat at Rs 26 billion while profit after tax declined approximately 36% QoQ/YoY to Rs 145 million.

Gross non-performing loan ratio deteriorated 20 basis points QoQ to 1.1%.

Click on the attachment to read the full report:

Motilal Oswal Muthoot Finance Q1FY21 Result Update.pdf

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