In Muthoot Vs Manappuram comparision, sometimes NPA takes a back seat.
Avg. GNPA of Manappuram is around 1% with 90 DPD. Avg. GNPA of Muthoot is above 2% with 120 DPD. Muthoot GNPA will go up even higher once they move to 90 DPD in Q4FY18.
My point is, Let’s not look at Gold AUM growth in isolation. See it along with other parameters including NPA.
My take on Q1 result:
I am invested and following Manappuram for a while now and the Q1 growth slowdown seems to be a short-term blip. Some decent amount of gold was auctioned during Q4FY17 and getting that quantity back into books is going to take some time.
Some people might ask why this is not a problem for Muthoot? Answer is, they do 1 year loan (vs 3 months for Manappuram) and accounts are not so frequently up for renewal like Manappuram. This is why their NPA is high.
For a 20%+ ROE, 2%+ dividend yield company run by great management, I see lots of valuation comfort with stock trading at 2 times trailing book and under 10 times earnings.
Disc: I am long Manappuram and it is one of my top 5 holdings. Views could be biased please do your own due diligence.