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Motilal Oswal Report
For Muthoot Finance Ltd., Q4 FY22 was characterised by:
gold assets under management growth of 6% QoQ, despite auctions of ~Rs 21 billion;
a decline of ~160 bps QoQ in spreads to 11.4%, driven by competition in the high-ticket sized gold loans;
gross stage III % still elevated at ~3%, despite declining by ~80 bps QoQ; and
pro-provision operating profit declined by 17% QoQ, but profit after tax fell 7%, led by provision write-backs of Rs 0.7 billion.
We estimate standalone assets under management growth of 8-9%/13-14% in FY23/FY24, with spreads declining to ~10%. We believe FY23 will be a difficult year for Muthoot Finance, with a clear trade-off between growth and margin.
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