Muthoot Finance (Muthoot) is India’s largest, niche gold finance company. We believe the gold finance segment is ripe for a turnaround as: a) regulatory concerns have largely receded, b) international gold prices have fallen substantially, c) loan growth should revive with economic growth, and d) most of the asset quality pain is likely over. Muthoot, being the largest incumbent with 4,265 branches, Rs218bn of loans and strong asset quality, is best positioned to benefit from the improving business sentiment. We expect 13% loan CAGR, higher NIMs and 16-19% RoE over FY15-17E. At 1.3x FY16E P/BV and 8.4xP/E, the stock is among the few value picks in the sector. We initiate coverage with Outperformer and a 12-month price target of Rs290 – 48% upside from CMP.