Prabhudas Lilladher has given Buy recommendation for Muthoot Finance with a target price of Rs. 1700 in its research report issued on Jun 29, 2021
Prabhudas Lilladher’s research report on Muthoot Finance
We have revised our estimates higher for NII by 10% and EPS by 6% for FY23. We expect rich return profile (6.3-6.5%:RoA, 22-23%:RoE) over FY22-23 led by; (a) the recent long term ratings upgrade resulting into reduction in cost of funds (we factor 40bps reduction in FY22) (b) healthy 18% AUM CAGR, steady customer accretion (sustainable 5%YoY growth), (d) superior asset quality (<1.5% GNPA, auctions at <0.5%). MUTH remains our top pick in the NBFC space.
Outlook
We reiterate ‘BUY’ rating on MUTH and tweak our core book multiple higher to 3x PABV FY23E (earlier 2.7x) arriving at SOTP price target of Rs1,700 (standalone: Rs1,686, subsidiary: Rs14) (earlier Rs1,486).