With the economy opening up, small businesses and MSMEs are starting their businesses. We expect the demand for gold loans will start rising in the next quarter and we would see good demand for gold loans in the coming quarters.
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This stock has started traidng below 40 months moving average. Not a good sign.
40 months moving average should be treated as a sancrosanct line by very very long term investors.
If it closes below 40 months moving average at the end of the month it is really a sign to be extremely cautious.
History tells that once stocks close below 40 MMA , the fall is brutal. Recent examples are Amazon and Manappuram Finance ( moved below 40 MMA at 145 and now it is hovering in 90s.
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Recently exited from the counter , but wanna see what happens when GOLD start outperforming
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What ‘s your thinking on selling decision? I am asking this because I have made recent entry in mannapuram at 95 rupess. Is the fall in stock price or strategic shift you have observed in the business model of gold finance company forced to make the exit decision? Your thought process will help us in making more informed decision in future.
Your post really scared me. Just saw the chart for Manappuram and Muthoot. I invested at higher level after studying gold financier video on SOIC channel. Still convinced in the story. Currently almost down by 30%…And as per your prediction ,may go down 30% further from this level. Very scary …Its also my big bet with 3rd highest weightage in the PF.
As per me story is intact for both Muthoot and Manappuram. The short term competition from fintech as well as from banks in gold financing is not really a threat. These are temporary things…Once the bank business uptick comes, they will divert their attention from gold financing business, as this is not their core business, neither its their expertise. But these Gold financing businesses can grow around 15 % CAGR henceforth. Management’s latest guidance is around 11 to 12 % i think…But business model as such is risk-proof and no problem at all, as Gold Loan to value ratio is restricted to 70% by regulator. So no NPA risk here at all…
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Which website is the data from?
@Mudit.Kushalvardhan if you hear concalls of manappuram and muthoot, they will say these banks will vacate this space, yield of 18% are not possible.
But at the same time if you hear concalls of CSB, Federal bank, they are in no mood to vacate this space. All SFBs will definetly will try to remove the bottlenecks.
Even till date i could not understand the fact that the interest rate charged by the gold NBFCs are higher than microfinance loans. Muthoot and manappuram are living in a dream that banks will go away and what will they do, if banks did not vacate this space
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The advantage of gold financing companies over banks have been that they can quickly disburse cash at slightly higher interest rates. The rates at which they are offering NCDs have also significantly gone down and these rates are at 6-7%. In the longer run, this will help these companies.
Stock prices have some correlation with the gold prices also… Since the Ukraine-Russia war is almost dragging, gold prices should have a bearish outlook, which is reflecting in the stock prices.
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what if banks also become efficient? They can become if they want to
Exactly. In concalls of Muthoot…Last concall…They call them “random players”, who will go away as soon as their main banking business pick up…I have not heard banking calls, where they are focussed on gold financing.
Also, the kind of client acquisition Muthoot can do…by not asking any income proof and IT returns, banks wont be able to do. Also there is still a social stigma attached to mortgaging gold jewelleries, so ppl dont like to go to their regular banks, where they are seen by their neighbours and relatives, mortgaging their gold jewellery…( Am I getting deluded?)…But I beleive the business model is robust…Hope is there
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Hope is not a stratgey 
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You are right.
I wonder what has happened to the business model of Muthoot Finance? Its still intact. Growing as usual around 12 to 15 % and Secured loan …LTV 70% against Gold. Nothing has changed for Muthoot from business perspective. But still PE has reduced from 15 to 10 and stock corrected by more than 30%…It doesnot make any sense at all…Can somebody throw some light…Its not like banks are enetering in gold loan first time…Its threat has always been there and under those circumstances, Muthoot has thrived…
Hope is a good thing, may be the best of things and no good things ever dies. Hope can be a dangerous thing. Hope can drive a man insane. It’s conclusion can be drawn from each character’s life, experience and prespective.
Disclaimer: Famous quotes from Shaswshank Redemption. Will delete this post within 24 hours.
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It is very simple. Stock is being dumped by FIIs. Also, whenever Gold falls, stock also falls. All the asset classes are falling.
"Trust the God (hope) but tie your camel " - an Arabian proverb.
Ukraine-Russia war will have a positive outlook on gold as safe haven asset. why u think it would be bearish??