Check Before You Invest : Muthoot Finance Ltd

BSE: 533398 NSE: MUTHOOTFIN ISIN: INE414G01012

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does Muthoot Finance Ltd belong to?

Muthoot Finance Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is Muthoot Finance Ltd a good quality company?

Muthoot Finance Ltd is a good quality company, based on a consistently good 10-year financial track record.

Q.3 Is Muthoot Finance Ltd undervalued or overvalued?

Muthoot Finance Ltd appears Overvalued, as its key valuation ratios are above with their past averages.

Q.4 Is Muthoot Finance Ltd a good buy now?

Muthoot Finance Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Muthoot Finance Ltd?

Muthoot Finance Ltd Operating Income growth is 35.33% for FY-2025, which is above its 5-year CAGR of 14.43%, indicating faster growth.

Q.2 Return on Assets of Muthoot Finance Ltd?

Muthoot Finance Ltd Return on Asset is 5%, which is below its 5-year historical median of 5.1%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NPM%	30.42	33.03
PPOP%	38.23	19.13
RoA%	5	5.1

Q.3 Return on Equity (ROE) of Muthoot Finance Ltd?

Muthoot Finance Ltd Return on Equity is 19.7% for FY-2025, which is in line with its 5-year historical median of 19.7%, indicating the business is making similar use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Muthoot Finance Ltd?

Muthoot Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 38.23% for FY-2025, which is above its 5-year median(19.13%), indicating increasing margins.

Q.5 Net Profit Margin of Muthoot Finance Ltd?

Muthoot Finance Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 30.42% for FY-2025, which is below its 5-year median( 33.03%), indicating decreasing margins.

Q.6 Total Asset growth of Muthoot Finance Ltd?

Muthoot Finance Ltd Total Asset growth is 42.58% for FY-2025, which is above its 5-year CAGR of 19.15%, indicating faster growth.

Q.7 Capital Adequacy ratio of Muthoot Finance Ltd?

Muthoot Finance Ltd Capital Adequacy ratio (CAR) is 23.71% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Muthoot Finance Ltd?

Promoters hold 73.35% of the Muthoot Finance Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of Muthoot Finance Ltd vs Industry Peers?

Muthoot Finance Ltd AUM CAGR is 19.15%, compared to the 5-year industry median CAGR of 23.24%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Muthoot Finance Ltd vs industry peers

Muthoot Finance Ltd profit metrics are above the industry median level of 17.64%, indicating stronger profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	30.42	24.08
PPOP%	38.23	25.73
RoA%	5	3.1

Q.3 Operating efficiency of Muthoot Finance Ltd vs industry peers?

Muthoot Finance Ltd ROCE (13.5) is above the industry median of (10.9); while the current ROE (19.7) are above than the 5-year average Industry ROE (15.6). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	30.42	24.08
PPOP%	38.23	25.73
RoA%	5	3.1
ROCE%	13.5	10.9
ROE%	19.7	15.6

Valuation & price assessment

Q.1 Stock return of Muthoot Finance Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 32.8% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	32.8%	24.2%	49.4%	57.4%

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	16.07	15.46	28.96
Price to Book	3.98	3.03	1.11
Price to Sales	5.72	5.34	9.10
EV to EBITDA	10.6	10.67	11.77

Q.4 Valuation ratios of Muthoot Finance Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 3.98% is higher than its historical median of 3.03%, indicating that at the current price the stock is overvalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

Muthoot Finance Ltd return on invested capital (ROIC) is 9.66% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

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