Muthoot Group Chairman, MG George Muthoot, died on Friday 5th of March, 2021, tragically. He was the Chairman of India’s largest Gold NBFC ‘Muthoot Group”. Let us understand if there are any repercussions of this event on the company’s operations.
Several Lessons from the past, such as Euro Crisis (2012-13) or Covid-19 Pandemic has shown the investor’s reaction towards the prevailing news in the market. At the same time, market has also taught the lessons not to respond impulsively to any news in the market straight away; doing this can result in investors incurring losses.
Undoubtedly, the news of the demise of a key person of the group of companies will have a short-term impact on the stock price. Still, we need to review the business and its financials and check whether this news is worrisome or an investor should carry on with their investments in this stock.
Muthoot Family is having a track record of almost 800 years in this line of business. The Muthoot Group formation story dates back to 1887, founded in Kerala by Shri Ninan Mithai Muthoot.
Muthoot Group started their business operations from Kerala, and Kerala did not have any supportive business environment due to worker unions, frequent strikes, etc. The company managed to handle this environment efficiently and diversified its base to almost all country states.
On a short-term basis, Muthoot Finance Stock can witness some pitfalls due to the unfortunate news of the Group Chairman’s demise. But on a longer horizon, the businesses and valuation look well settled. The business’s valuation part, where PE is 13-14, and a decent EPS growth, presents a clear image of high business potential. Also, there are no red flags in the corporate governance of the group till date. Hence, at this point, Investor should not respond to news instantly, rather should strict to business and financials and then only ought to make a decision.
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