Muthoot Microfin share price soars 14% as net profit more than doubles in Q3

Shares of Muthoot Microfin soared 14 percent in intra-day deals on Tuesday, January 30, as the company more than doubled its net profit for the December quarter.

Its net profit for the quarter under review surged 119 percent year-on-year (YoY) to ₹124.60 from ₹56.9 crore in the year-ago period. Meanwhile, its net interest income (NII) jumped 53.07 percent YoY to ₹343.07 crore versus ₹224 crore in the same period last year. Total income also rose 52.61 percent YoY to ₹584.83 crore in Q3FY24.

Furthermore, the company's disbursements in the quarter grew 19.4 percent YoY to ₹2,592.10 crore from ₹2,170.5 crore last year; and assets under management rose 39 percent YoY to ₹11,458.10 crore in Q3FY24 from ₹8,264.6 crore in Q3FY23.

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Its net interest margin (NIM) also advanced 86 bps YoY to 12.6 percent in the quarter under review from 11.7 percent last year. Similarly, asset quality also improved with gross non-performing assets (GNPA) at 2.29 percent, down 1.2 percent YoY and net NPA down 0.64 percent YoY to 0.33 percent.

"The improved NPA (non-performing assets) figures (NNPA of 0.33 percent) underscore our commitment to maintaining a healthy loan portfolio. All the key indicators are showing tremendous growth and the macro-economic outlook of the country is favourable to the industry for us to sustain this growth rate," Sadaf Sayeed, CEO, Muthoot Microfin, said in a press release.

Its return ratios also showed significant advancement with RoA at 4.5 percent in Q3FY24, up 1.5 percent YoY from 2.9 percent; and RoE at 26 percent in the December quarter this financial year, up 9.58 percent YoY from 16.4 percent last year.

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The stock rose as much as 13.9 percent in intra-day deals to its day's high of ₹266.55. It is now up over 17 percent from its 52-week low of ₹227.45, hit on January 18 this year, however, still 5 percent away from its record high of ₹280.80, hit on December 26, 2023. In January till date, the stock has gained almost 3 percent.

Muthoot Microfin's ₹960 crore initial public offering (IPO) had a tepid debut on the stock exchanges in December 2023. The company's shares were listed at a 5.4 percent discount to the issue price of ₹291. Despite being subscribed 11.52 times at the close of the IPO, the market reception on the listing day was subdued. Post listing, the shares of Muthoot Microfin have primarily traded within a narrow range, closely aligned with the listing price.

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Muthoot Microfin holds the position of being the fourth largest microfinance company in India based on its gross loan portfolio. It stands as the third-largest microfinance entity in South India and holds the leading market share in Kerala. Additionally, the company plays a significant role in Tamil Nadu, where it commands an almost 16 percent market share.