• For 9MFY20, gold loan and tonnage increased 25% and 9% respectively, indicating large part of book reprising may have already happened. Good part is that entire borrowing cost increase has been passed on. Although growth in MFI was strong, NPAs has started inched up from 0.86% in Q2FY20 to 1.34% and company also provided INR160m as contingency for the disturbance witnessed in two district of Karnataka.

• With rise in gold price have clearly bolstered every possible metrics of gold loan business i.e. growth, margins and profitability.

• Sustainability of AUM growth remains the key given over the past 3 years, gold AUM, standalone revenue and operating expenses have grown at CAGR of 9%, 22% and 14% respectively. A large part of profit increase has come from increasing gold loan rates from 24% to 27%, which is already 300-400bps higher than competition.

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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