• Muthoot Capital Services Disbursement (2W) growth -6% YoY, AUM growth 6.1% YoY, NII growth 4.5% YoY, PPP growth -10.7% YoY, PBT growth -32.7% YoY.

• Margins improved sequentially on back of stable borrowing cost. Opex increased on higher collection efforts while asset quality was softer than usual. Lower tax rate aided profits.

• Although MCSL has survived the systemic liquidity shock, it has been impacted by slowdown in its primary product i.e. 2W. Small NBFC like MCSL is currently grappling with three main issues - slow growth, higher borrowing cost and operating deleverage. While the profit impact of these is high, any revival in growth will result in sharp earnings uptick.

• The good part remains the sharp focus on collections and investing in future growth (products & geographies), so that when the tide turns they are geared to capture the market. Valuations at 9.3x on FY22 earnings.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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