Muthoot Capital Services Ltd (Dolly Khanna Portfolio Stock) Research Report By SMIFS

Muthoot Capital Services Ltd., promoted by the Muthoot Pappachan Group, is a Non Banking Finance Company (NBFC) based in Kochi, Kerala . The company offers fund based financial services to retail, corporate and institutional customers through the wide network of branches of Muthoot Fincorp Ltd . Its portfolio includes two-wheeler loans, and corporate loans.

We are proud to share yet another year of robust performance from Muthoot Capital Services, the Muthoot Blue Automobile Financing NBFC. Know more, visit: https://t.co/bYuwEsiMWQ pic.twitter.com/hBag3EoNe1

— Muthoot India (@MuthootIndia) April 27, 2019

The company has significant presence in Southern India and is rapidly expanding into other geographies. Interest rates & funding remain a concern for the NBFC sector, but the company has adequate liquidity and various funding options which make it immune to the current scenario.

Strong management team with good execution skills led by extensive branch network of Muthoot Fin Corp in urban and semi urban area, will let the company scale greater heights.

The company has over dependence in the 2 wheeler space & concentrated presence in Kerala, which will cause hindrance to the growth. The rise in price of 2 wheelers due to several regulatory changes could further impact growth.

Considering rise in visibility in AUM going forward & the turbulence faced by the 2 wheeler industry , we reduce our multiple of 2.8x to FY21E Book Value to 2.3x to FY21E Book Value to arrive at a target price of INR1077.