I get the valuations are cheap and the fear of competition from banks might be already priced in. But what I can’t understand is why the growth is not showing up even after 3 years of Covid. Because historically, this competition between banks and gold loan companies is a little bit cyclical. During slow times, banks aggressively pursue GLs. GL companies can’t compete due to higher rates but then in some time, banks go about their usual business and GL companies come back. Is it different this time around? From what I understand, the management of either of the GL companies is not really admitting to this bad growth.
But at the same time, I also believe if banks could take away the business of GL companies they would have done so 3 years back, or 5 years back, or 7 years back.
Also, not sure about this but I think 2point2 capital (which was a huge proponent of GL business, at least as per their past research blogs) has exited its Muthoot position (of nearly 9-10%).
Another perspective is that the target customer of GL’s is a particular segment of around 50k-5l, which has not seen a sharp recovery post covid. So as and when the recovery is more broad based we can see some growth.
Would love to know your views.
| Subscribe To Our Free Newsletter |
