Investment opportunity one shouldn't miss

August 3, 2011   ·   1 Comments

Muthoot Finance has reported a massive increase of 124% (YoY) in its first quarter FY12 net profit. During the period, net profit of the company jumped to Rs 190 crore from Rs 84.8 crore in the corresponding quarter last fiscal. Income from operations shot up 140.5% to Rs 914 crore from Rs 380 crore year-on-year. The mortgage lender’s total gold loan book almost doubled to Rs 17,803 crore compared with Rs 9,040 crore a year ago.

Muthoot Finance Financials:

FY11 FY10 FY09 FY08
Income 2298.34 1089.38 620.40 368.64
PAT 494.17 227.58 97.72 63.60
EPS 13.29* 7.56 19.94 127.19
Equity 371.71 301.00 49.00 5.0

* denotes EPS in on new Base of 371.71 Lac shares. For Pre Issue Equity: Rs. 320.21 cr , EPS will come to 15.8

Projected FY12 Results on this rate with this result will be:

Income PAT EPS
3656 Crore Rs. 760 Crore Rs. 20.42

Factors that why we think Muthoot Finance makes a stellar investement:

  • www.stockssavvy.comMarket leading position in the Gold Loan business with a strong presence in under-served rural and semiurban Market: People who are realising Microfinance Companies as next bet in India should give a thought on the Potential of this Company.
  • Strong brand name, track record, management expertise and Promoter support
  • High-quality customer service and short response time: NPA of under 0.5% make it a dream NBFC company.
  • Strong capital raising ability
  • In-house training capabilities to meet its branch expansion requirement
  • India’s Biggest Gold NBFC Company
  • Company Annual Growth Rate is above 50 % which is likely to remain above 50 % for next few years.

Verdict: The results are really speaking volumes about the company. At present, Stock is trading at P/E of 9 for FY12. Considering, it is the biggest gold NBFC company, it deserves a better P/E than manapuuram which is trading at P/E of 13. It makes an ideal investment opportunity where one should take. Taking a conservative approach, we believe this investment can prove to be multi bagger in years to come.

Bharti Airtel: We gave a buying call on Bharti on 2nd February, 2011 @ the levels of 320 levels & a year back on the levels of 270 Rs.  Here is the link:

Presently Bharti Airtel is on 430 levels. Traders can sell the stock as stock is on 52 weeks high. Long term investor can hold the stock with a year view which can give them some more appreciation of around 20% .

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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  • Rajesh

    This is the best investment..

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