The downgrade of Fusion finance could be a incredible opportunity for Muthoot Micro finance to shine. Fusion finance could see a rating downgrade, challenges in getting loans from banks which leads to decreased forward lending, and an elevated field staff attrition.
This is going to help substantially safe NBFCs with good promoter pedigree such as Muthoot MicroFin and Access Gramin.
Read the latest concall and have the feeling that Management is also taking the karnataka MFI ordinance very seriously and preparing for worst if collection efficiency drops in karnataka post MFI ordinance. Initially they are saying that it is good for them as they are regulated entity and this ordinance will curb the unregulated local lenders, but as concall proceeds, fears of dropping collection efficiency also aroses.
On disbursement front, they are taking very calibrated approach. Infact disbursement got reduced Q/Q basis.
On employee attrition front, they have taken very good steps and brought the attrition within 30%, When other competitors are facing 50%.
Overall, uncertainty still prevails and management is tightening their belts to fight for the worst.
Sometimes, uncertainty brings so much fearfulness in mind , that it became very difficult to put your hard earn money. But then the gut feelings says, big money can be made only during investing in times of uncertainty. Certainty always comes with cost.
Disclaimer: Have tracking position.
What are your thoughts guys, Currently it is trading at much cheaper rate, less than half price of IPO. I feel the promoters are too experienced to let this kind of crisis make them vulnerable? Should we add more at this point or wait?
It’s better to wait for next quarter results to come since it has 10% exposure in karnataka.im expecting a bad results in next quarter. If it fall then I will definitely enterprises that time
Met with Muthoot Management last week,
KTA:
Seems like Ujjivan SFB and Muthoot might come back faster and stronger than others.
Disc: Not invested.
Latest interview of CEO Sadaf Sayeed
Very good set of results posted by company. Company has closed some of the branches which were not performing in the past in Q3. Asset quality is also improving which is reflecting in numbers.
Disc - Invested and biased
Though results have been good , MFI (IGL loan book) AUM has infact de-grown q-o-q seems. Seems management is adopting a cautious approach in growing MFI book. One or two quarters more one has to wait to see growth in MFO loan book which should then lead to growth in NIM and overall PAT as cost of borrowing will also come down by small percentage points.
All the growth is coming from Individual loans and Microlap loans.
Why do you think that Individual Loans(IL) and Micro LAP are not coming under MFI?
I thought these were new products introduced by MFI players few months back. And comes under microfinance loan itself.
In my opinion I don’t see any decrease in MFI AUM. All I can see is change in product mix within microfinance loans.
Correct me if I am wrong.
Here are 3 links to insightful article which might be helpful to someone who want to understand MFI space
They Finally upgraded the AUM guidance to 20% in a recent TV interview given to ET now
Good to see that management hears the feedback.
Decent numbers from Muthoot Microfinance
18% YoY, 3% QoQ AUM growth
49% AUM growth
JLG part reduced to 76%
Collection efficiency at 97.97% (157 bps QoQ improvement)
X bucket CE- 99.89%
Started Gold loan business (co-lending with Muthoot fincorp)
Muthoot Microfin q4 FY 26 concall provides some very interesting reading. An important snippet I read was as follows
Muthoot Microfin (MML) formally launched “Vision 3030”: AUM of INR 30,000 cr by 2030, while targeting “consistently delivering a ROA of 5% and above, ROE of 20% and above, and touching 10 million lives by 2030.” The central strategic shift is from a monoline JLG MFI to a multi-product, increasingly secured/individualized lending franchise, using the same branch/customer base plus technology-led underwriting and digital collections to improve resilience across MFI cycles.
Just for the record, current AUM as on q4 FY 26 was 14000 crores.
In the concall one of the analysts asked a hypothetical question wherein he mentioned that based on AUM and ROA, the company can comfortably cross Net Profit figure of 1000 crores by FY 30. TO which management replied that the calculations were right.
Now there is a long way to go for FY 30. But if the company does manage to reach 1000 crores net profit by FY 2030, from FY 26 levels of 170 crores, it will be roughly 6 times growth in profits in 4 years. Current market cap is 4000 crores. This makes for some interesting calculations in terms of what its market cap could reach if it does achieve the expected net profit figure. And that number will be reached in a calibrated manner wherein the company will need to compound its net profits at nearly 55% CAGR, which seems a tall order. Possible but difficult…
But even if it were to grow its profits to 500-600 crores it will be compounding its profits at 30-35% cagr. That itself can lead to some serous returns going forward.
I bought based on the techno funda picture post q4 results and the market gyrations provided good dips to accumulate this one.
Q1FY27 results-
Another microfinance co. with good set of nos.- AUM up 18%, but more importantly disbursemnt is up 49% YoY.
Improvements across credit cost, asset quality, collection effficiency and hence PPOP & profit.
Non-JLG part of the book now stands at 24%.
CRISIL rating upgraded which will help in lowering COF.
The guidance is intact- 20% ROE, 30,000 cr AUM by 2030 which currenly stands at 14,500 cr.
Key ratios-
FY27 guidance, Q1 performance
** Holding and baised.
