Lets leave aside narratives. Here are the major questions we need answers as investors:
- Is Muthoot better at gold financing than manappuram?
Muthoot always had higher productivity than Manappuram. However, since FY14 (which was the last bust), here are the growth numbers in different variables
– AUM: Manappuram (12.99%) vs Muthoot (11.15%)
– Tonnage: Manappuram (8.01%) vs Muthoot (6.89%)
– Branch network: Manappuram (1.16%) vs Muthoot (1.13%)
– Productivity growth: Manappuram (11.69%) vs Muthoot (9.92%)
Its quite clear that incrementally Manappuram has done slightly better. However, there is not much to pick between the two. Manappuram is in no way inferior in its growth trajectory. Muthoot is a more productive player whereas Manappuram is increasing its productivity at a higher level than Muthoot.
- Will banks and other NBFCs eat their lunch?
SBI started its gold loan business under the agri portfolio (so are probably rural focused). They have grown from almost nothing AUM in FY17 to 2179 cr. in FY20. Bajaj finance has grown their AUM from 37 cr. in FY15 to 853 cr. in FY19. Their FY20 numbers are not reported in their annual report. So clearly, new players are coming in and taking market share. At the same time, Muthoot and Manappuram have grown their gold AUMs at by 14.42 and 15.11% respectively over the last three years. This growth has mainly come from branch level higher disbursement and not through additional branches. This growth looks sustainable (remember when they grew their books at 50% rates in FY10 and almost went belly up?). I prefer lower but more sustainable growth.
In the next post, I will compare the vehicle loan business with other established players to try and understand fears on the vehicle loan portfolio. As a request, please respond with data points rather than narratives so that we all get something useful out of this exercise. The gold loan data is below.
| AUM (in cr.) | FY07 | FY08 | FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | Growth since FY14 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Muthoot finance | 1’420.10 | 2’179.00 | 3’300.10 | 7’341.70 | 15’728.10 | 24’417.30 | 26’000.04 | 21’617.90 | 23’349.90 | 24’335.50 | 27’219.90 | 28’848.40 | 33’585.30 | 40’772.40 | 11.15% |
| Manappuram finance | 7’489.50 | 11’532.70 | 9’945.80 | 8’155.20 | 9’269.30 | 10’080.60 | 11’124.53 | 11’734.98 | 12’961.52 | 16’967.18 | 12.99% | ||||
| Bajaj finance | 37.39 | 146.78 | 543.96 | 655.01 | 853.37 | ||||||||||
| SBI | 900.00 | 2’179.00 | |||||||||||||
| Tonnage | FY07 | FY08 | FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | |
| Muthoot finance | 23.00 | 30.00 | 39.00 | 65.00 | 112.00 | 137.00 | 134.00 | 118.00 | 131.00 | 142.00 | 149.00 | 155.00 | 169.00 | 176.00 | 6.89% |
| Manappuram finance | 22.50 | 53.00 | 65.60 | 51.40 | 45.60 | 53.10 | 59.60 | 61.10 | 64.00 | 67.50 | 72.40 | 8.01% | |||
| Branches | FY07 | FY08 | FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | |
| Muthoot finance | 551.00 | 707.00 | 985.00 | 1’605.00 | 2’733.00 | 3’678.00 | 4’082.00 | 4’270.00 | 4’245.00 | 4’275.00 | 4’307.00 | 4’325.00 | 4’480.00 | 4’567.00 | 1.13% |
| Manappuram finance | 436.00 | 645.00 | 1’005.00 | 2’064.00 | 2’908.00 | 3’295.00 | 3’293.00 | 3’293.00 | 3’293.00 | 3’293.00 | 3’330.00 | 3’372.00 | 3’529.00 | 1.16% | |
| Gold loan per branch (cr.) | |||||||||||||||
| Muthoot finance | 2.58 | 3.08 | 3.35 | 4.57 | 5.75 | 6.64 | 6.37 | 5.06 | 5.50 | 5.69 | 6.32 | 6.67 | 7.50 | 8.93 | 9.92% |
| Manappuram finance | 3.63 | 3.97 | 3.02 | 2.48 | 2.81 | 3.06 | 3.38 | 3.52 | 3.84 | 4.81 | 11.69% |