MUTHOOTFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.1

📊 Financial Overview

• Profitability: PAT rose to ₹2,046 Cr from ₹1,508 Cr — 89.7% quarterly growth
• Margins: ROCE at 13.4%, ROE at 19.7% — solid capital efficiency
• Debt Profile: Debt-to-equity ratio of 3.51 — high but typical for NBFCs
• EPS: ₹154 — strong earnings base
• Dividend Yield: 0.82% — modest but consistent

📈 Valuation Metrics

• P/E Ratio: 20.6 — slightly below industry average of 22.6
• P/B Ratio: ~4.3 — reasonable given book value ₹734
• PEG Ratio: 2.16 — suggests valuation is ahead of growth
• Intrinsic Value: Estimated around ₹2,900–₹3,050 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Leading NBFC specializing in gold loans, with growing presence in personal and SME lending
• Moat: Strong brand, extensive branch network, and deep rural penetration
• Growth Drivers: Gold price appreciation, digital lending, and financial inclusion initiatives

📌 Entry Zone Recommendation

• Suggested Entry: ₹2,950–₹3,050 — near DMA50 and intrinsic value
• Technical Indicators: RSI at 53.6 (neutral), MACD positive — bullish momentum

📈 Long-Term Holding Guidance

• Hold for long-term if accumulated near support; monitor gold price trends and asset quality
• Valuation is fair; suitable for conservative investors seeking steady returns

✅ Positive

• Strong quarterly profit growth
• Solid ROE and EPS
• FII holding increased by 0.74%
• Stable dividend payout

⚠️ Limitation

• High debt-to-equity ratio (3.51)
• PEG ratio suggests valuation ahead of growth
• DII holding declined by 0.84%

📰 Company Negative News

• Concerns over gold loan saturation and regulatory scrutiny in NBFC sector

🌟 Company Positive News

• Q2 FY26 net profit up 35.7% YoY; strong growth in gold loan disbursements
• Digital gold loan platform expanded to 90% of branches

🏭 Industry

• NBFC industry P/E at 22.6 — Muthoot trades slightly below average
• Sector driven by rural credit demand, gold price trends, and financial inclusion

🧾 Conclusion

• Muthoot Finance is a fundamentally strong NBFC with consistent profitability and sector leadership
• Accumulate near support zones for long-term gains; monitor debt levels and regulatory developments