Buy Muthoot Finance; target of Rs 3070: ICICI Securities

What happened

ICICI Securities said it backed Muthoot Finance to keep executing strongly, upgraded the stock to BUY, and revised its target price to Rs 3070 from Rs 3500. It noted first-half assets under management of INR 2.1trn, up 15.1% from the FY26 base.

Confirmed

Global impact / market context

An upgrade with a target price, which is the analyst's estimate of future share value, can pull investor attention toward the stock. The reported 15.1% growth in assets under management, meaning the loan book, supports the case that demand for gold loans is strong.

Analyst inference

The report credits high gold prices, a positive demand cycle, and favourable regulations for FY26 results. For FY27 it cites company guidance of 25% loan book growth and stable yields and net interest margins, which mean profit earned per loan, while flagging rising competition.

Analyst inference

What to watch

1. The report states FY27 guidance of 25% AUM growth, with sustainable yield of 18%-18.5% and net interest margin, which means profit per loan, of 10.5%-11%. Confirmed
2. ICICI Securities proposes valuing Muthoot's standalone business at 2.1x FY28E price-to-book, which compares share price with accounting value, and its home finance arm at 1x FY28E price-to-book. Proposed
3. Rising competition in gold loans could pressure yields and profit per loan, so branch expansion and well-managed loan-to-value, meaning loan size versus gold pledged, are the execution points to track. Analyst inference

Evidence

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