Muthoot Finance, Manappuram Finance are gaining investor attention in the recent times which has helped these counters to perform better on the bourses.
And, given the tight liquidity conditions faced by NBFCs and changes to banks’ collateral lending norms, the Gold financing activity is set to gather pace in the country.
In fact, India’s Gold loan providers are building a currency chest that can transform their future.
They are expected to witness strong growth in their revenues and profit given India’s strong gold appetite and individual holding.
There is 30,000 tonnes of gold lying as ornaments with the public and today the organized gold lending market is just 100 or 200 tonnes.
This augurs well for gold financiers such as Muthoot Finance, Manappuram Finance, and others.
There’s a rush among them to raise funds given the possibility of gold ornaments lying in lockers may be used to meet financial needs.
Muthoot Finance has focussed mainly on its core strength which is gold financing.
With 90% of its portfolio is gold loans, which is its core competency and giving good business.
Muthoot hopes to report 15-20% increase in its revenue.
It reported 77% increase in consolidated net profit Rs 899.82 crore in the quarter ended September 2019 as against Rs 509.19 crore during the previous quarter ended September 2018.
Sales rose 32% to Rs 2397.38 crore.
Last month, Muthoot Finance raised $450 million through its maiden offshore bond issue from investors across the US, Asia, and Europe.
Manappuram Finance plans to raise up to $250 million through offshore bonds to tide over liquidity concerns.
The gold financier doesn’t want to be left out in this bridge financing business which is offering tremendous growth opportunity.
In the quarter ended 30 September, Manappuram reported an 82% jump in its consolidated profit to Rs 402.28 crore, compared to the corresponding period a year ago.
Its total assets under management (AUM) grew by 31.91% to Rs 22,676.93 crore during the period, while its gold loan AUM rose 20.45% to Rs 15,168.34 crore, from the same quarter last year.
Interestingly, the global brokerage Bank of America Merrill Lynch expects Gold prices to touch $ 2,000 per ounce mark next year.
The price outlook is a potential re-rating trigger for Gold financiers.
Net net we believe that gold finance stocks are likely to remain in focus on the near-term
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