Release Date: February 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Muthoot Finance Ltd (BOM:533398, Financial) reported a 27% year-on-year increase in consolidated loan AUM, reaching INR82,773 crores.
- The company's consolidated profit after tax increased by 23% year-on-year, amounting to INR3,285 crores for the nine-month period.
- Subsidiary Belstar showed significant growth with a 65% increase in AUM and an 85% rise in loan disbursements year-on-year.
- Muthoot Home Finance reported a 26% year-on-year increase in loan assets under management, now standing at INR1,783 crores.
- The company successfully raised INR480 crores through the 33rd Public Issue of Secured Redeemable Non-Convertible Debentures this quarter.
Negative Points
- There was a slight dip in new customer additions and old customer reactivations on a sequential basis, attributed to seasonal factors.
- The cost of borrowings is expected to rise from 8.55% to around 9% in the next six months, potentially impacting margins.
- Belstar's asset quality showed a minor deterioration with a 40 basis points increase in NPAs sequentially.
- The company's operational expenses saw a significant jump, particularly in the insurance brokers entity, though the exact reason was not specified.
- The gold loan growth was largely driven by an increase in gold prices rather than new customer acquisitions, indicating a dependency on gold price fluctuations.
Q & A Highlights
Highlights of Muthoot Finance Ltd (BOM:533398) Q3 FY24 Earnings Call
Q: There is a marginal uptick of 15 basis points on gold loan yields. Is it driven by NPL reduction or changes in customer segment mix?
A: Being a short-term loan, such fluctuations are usual. It's not a substantial uptick, only 15 basis points. (George Muthoot, Managing Director; Oommen Mammen, CFO)
Q: Could you share the quantum of auctions and settlements done in the quarter?
A: Auctions were about INR381 crores for the quarter. We don't do any settlements. (George Muthoot, Managing Director; Oommen Mammen, CFO)
Q: There is a slight dip in new customer addition and old customer reactivation. Is it due to reduced advertisement and publicity expenses?
A: No, it is not because of that. Some of these things are seasonal. The number is not that significant. (George Muthoot, Managing Director; Oommen Mammen, CFO)
Q: Referring to the ARC sale last quarter, where does the recovery reflect in the P&L?
A: The recoveries are reflected in investments. Once exhausted, it comes as interest income. (Oommen Mammen, CFO)
Q: Can you share the breakup of your loan book based on ticket size?
A: Above INR3 lakh is 27%, between INR1 lakh and INR3 lakh is 38%, and less than INR1 lakh is 35%. (Oommen Mammen, CFO)
Q: What are the attrition levels at Muthoot?
A: Attrition was high during COVID but is now almost back to pre-COVID levels. (George Muthoot, Managing Director)
Q: How are you looking at the cost of borrowings, particularly from banks?
A: The borrowing cost as of December quarter is around 8.55%. It might move towards 9% in the next six months. (Oommen Mammen, CFO)
Q: Can you give some guidance on the growth coming in the next few quarters?
A: We have guided for a 15% growth in gold loan for the full year and expect to achieve that. The overall market for gold loans is increasing. (George Muthoot, Managing Director)
Q: What is the outlook on Belstar's credit cost and Stage 2 numbers?
A: Stage 3 is 1.9%, and Stage 2 is 1.03%. The credit cost is stabilizing. (Oommen Mammen, CFO)
Q: Can you tell us about the branch openings and RBI's stance on further branch openings?
A: We opened 150 branches last year and received permission for another 114 branches. We will continue to approach RBI for more branches. (George Muthoot, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
