Muthoot Finance FY22 Updates

The AUM of Muthoot Finance for FY22 stands at 58,100 Crores. It registered a YoY growth of 10%. The Net Interest Income growth was 7% YoY. 5 Year Net Interest Income growth was 17% CAGR. The Loan growth was 10% in FY22, with the 5-year Loan Growth being 17% CAGR. The Yield in FY22 was 19.3% which was the lowest in the last 7 years. While on the other hand, the cost of funds was at 8%. Due to the lower interest rate environment, the cost of funds was also at the lowest in the last 7 years. Spreads of the company in FY22 were at 11.3%. The highest spread the company ever recorded was of 13.4%. Net Interest Margin was at 12.9% in FY22. This NIM in FY22 was the lowest in the last 5 years. Highest NIM was 15.2% in FY20. The company recorded a Cost to Income ratio of 25.1% in FY22 and it stands at the lowest level for the company.

Profit After Tax in FY22 stands at 3,950 Crores in FY22, which was up 6% YoY. This PAT growth of the company was the lowest in the last 8 years. The Return on Assets (ROA) and Return on Equity(ROE) stand at 5.9% and 24% respectively in FY22.

Customer Profile of the Company in FY22:

Customers who have taken loans below Rs. 1 Lakh: 42%

Customers who have taken loans between Rs. 1 Lakh and 3 Lakh: 36% and,

Customers who have taken loans above Rs. 3 Lakh: 22%.

Regional Wise Branch Penetration:

South India: 60%

North India: 17%

West India: 16%

East India: 7%.

When we look at the stock price, the stock is down 43% from its 52-week high. The reasons for the same are:

1. Rising Competition from Fintechs and Banks as they are entering into Gold Loan Segments as well.
2. Lowest Interest Rates offered by Rupeek at 5.88% p.a.
3. The fierce Competition led Muthoot Finance to offer loans at 6.9% p.a.
4. The company faces geographical concentration risk, most of its Loan Book, is concentrated in South India.