Antique Stock Broking: Experts in Muthoot & Manappuram
Antique Stock Broking‘s recommendations regarding Muthoot Finance & Manappuram Finance are not meant to be taken lightly.
The team has a clear understanding of the mechanics of the two stocks and of what makes them tick.
The two stocks were first recommended by Antique as far back as in 2014 when they were available at throwaway prices.
Antique Stock Broking: See huge value in Muthoot Fin & Manappuram Finance | Expect Manappuram Fin stock to touch ₹30 in next 6 months
— ETMarkets (@ETMarkets) August 20, 2014
Both stocks have delivered mega multibagger gains since then.
Antique has been increasing the target price on a periodic basis and both companies are effortlessly breaching them.
In November 2017, when Muthoot Finance was coasting at Rs. 487, Antique boldly projected a target price of Rs. 688, which was a hefty upside of 41%.
Needless to say, this target was also met by the powerhouse stock.
Strong report on Muthoot Finance
Antique on Muthoot Finance (CMP 487)
Maintain buy with target price at 688
Earnings up 23% even post adjusting for one-off— Varinder Bansal ?? (@varinder_bansal) November 9, 2017
‘Very strong’ Q3FY20 results vindicates confidence
Muthoot Finance reported blockbuster Q3FY20 results.
The asset quality improved with the gross NPA plunging to 2.54% vs. 3.43% in the same quarter of the previous year.
The loan growth was also very strong with the AUM surging 19.1% YoY to 38498 crore.
The net interest margin was the highest in the last 12 quarters.
very strong earnings from muthoot finance in Q3
asset quality improves
gross NPA falls to 2.54% vs 3.43% QoQ
loan growth very strong
AUM up 19.1% YoY at 38498cr
net interest margins highest in last 12 quartersmore on telegram: https://t.co/5tUohucvPR
— Sonia Shenoy (@_soniashenoy) February 17, 2020
Naturally, the blockbuster results created a frenzy in Dalal Street and everyone pounced on the stock, sending it sprinting a mammoth 18%.
Muthoot Finance talks about the company's growth targets for the gold loan business and branch expansion plans for FY21. #Q3WithBQ #BQLive
https://t.co/Lvp1bTV41E— BloombergQuint (@BloombergQuint) February 17, 2020
What are the trends in the core gold business? Is there adequate liquidity? Tune in as Oommen K Mammen of Muthoot Finance shares his view! @TheMuthootGroup pic.twitter.com/ZF0RJ7EiF0
— ET NOW (@ETNOWlive) February 17, 2020
Muthoot Finance is a “pot of gold” with 53% upside
Antique is so enthused by Muthoot Finance’s performance that it has described it as a “pot of gold“.
It has pointed out that growth is back, both in terms of tonnage and value.
The growth is commendable given the difficult liquidity environment due to the slowdown.
Also, the sharp improvement in profitability was caused due to operating leverage.
The best part is that Muthoot Finance has now been awarded a target price of Rs. 1145, which represents a whopping upside from the CMP.
Antique on Muthoot Fin
BUY
TP `1145
Growth is back, both in terms of tonnage & value
Mgt says: Gold loan book growth for FY20 will be 18% on back of strong demand & surge in gold prices
Liquidity constraints sorted, strong growth ahead
AUM & PAT at 19% & 38% CAGR over FY19-22 pic.twitter.com/IdWuvRjHbe— Abhishek Kothari ?? (@kothariabhishek) February 17, 2020
Immune from “Kerala” risk
Many in Dalal Street have the unspoken fear that Muthoot Finance would fall victim to militant trade unionism, encouraged by the leadership of the Communist Party of India (Marxist), which is ruling Kerala at present.
In fact, a few days ago, the MD of Muthoot finance was attacked mercilessly by goons of the CITU and suffered injuries.
Why Kerala is an economic laggard wr no serious businessman who want to venture in and talented workforce from the state flees.
Muthoot finance company MD injured in attack by CITU workers in Keralahttps://t.co/9u7kP2hUFc— Prasanna Viswanathan (@prasannavishy) January 14, 2020
Thankfully, Muthoot Finance has distanced itself from Kerala to the extent possible and is relatively safe from the deadly communists and trade unionists.
Only 1% of the profits and 4% of the AUM is attributable to Kerala.
Classic case of noise vs fundamentals: Muthoot Finance
Kerala business constitutes:
Profits = INR 0.2bn (1%)
AUM = INR 16bn (4%)
Data Source: Antique— Varinder Bansal ?? (@varinder_bansal) September 9, 2019
The management has also adopted a belligerent stance and threatened to walk out of Kerala and close all of its branches therein.
Hopefully, this will impart some sense into the communists and they will behave in a more responsible manner.
Muthoot Capital & Manappuram Finance will also prosper
It is not known whether Dolly Khanna has a stake in Muthoot Finance.
However, she does hold a big chunk of 1,85,765 shares of Muthoot Capital as of 31st December 2019, which is worth Rs. 11 crore at the CMP of Rs. 595.
Dolly also has/ had a big shareholding in Manappuram Finance.
She held a peak of 99,32,330 shares of Manappuram as of 4th May 2018.
This was reduced to 74,09,150 shares as at 31st March 2019.
Her present holding is not known.
Presumably, the description of Muthoot Finance as a “pot of gold” will apply also to Muthoot Capital and Manappuram Finance, given the business synergies between the three companies.
