Check Before You Invest : Muthoot Microfin Ltd

BSE: 544055 NSE: MUTHOOTMF ISIN: INE046W01019

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

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

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

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

Muthoot Microfin Ltd is a average quality company, based on a somewhat consistent 10-year financial track record.

Q.3 Is Muthoot Microfin Ltd undervalued or overvalued?

Muthoot Microfin Ltd appears Somewhat overvalued, as its key valuation ratios are above with their past averages.

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

Muthoot Microfin Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Muthoot Microfin Ltd?

Muthoot Microfin Ltd Operating Income growth is 13.91% for FY-2025, which is below its 5-year CAGR of 24.39%, indicating slower growth.

Q.2 Return on Assets of Muthoot Microfin Ltd?

Muthoot Microfin Ltd Return on Asset is -2%, which is below its 5-year historical median of 1%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NPM%	-8.69	5.69
PPOP%	15.78	23.29
RoA%	-2	1

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

Muthoot Microfin Ltd Return on Equity is -8.2% for FY-2025, which is below its 5-year historical median of 4.3%, indicating the business is making worse use of its shareholders capital.

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

Muthoot Microfin Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 15.78% for FY-2025, which is below its 5-year median(23.29%), indicating decreasing margins.

Q.5 Net Profit Margin of Muthoot Microfin Ltd?

Muthoot Microfin 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 -8.69% for FY-2025, which is below its 5-year median( 5.69%), indicating decreasing margins.

Q.6 Total Asset growth of Muthoot Microfin Ltd?

Muthoot Microfin Ltd Total Asset growth is -7.89% for FY-2025, which is below its 5-year CAGR of 21.34%, indicating slower growth.

Q.7 Capital Adequacy ratio of Muthoot Microfin Ltd?

Muthoot Microfin Ltd Capital Adequacy ratio (CAR) is 27.9% 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 Microfin Ltd?

Promoters hold 55.47% of the Muthoot Microfin Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

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

Muthoot Microfin Ltd AUM CAGR is 21.34%, compared to the 5-year industry median CAGR of 9.9%, indicating faster growth and gaining its market share.

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

Muthoot Microfin Ltd profit metrics are in line with the industry median level of 7.31%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	-8.69	15.95
PPOP%	15.78	4.54
RoA%	-2	1.45

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

Muthoot Microfin Ltd ROCE (8.8) is above the industry median of (4.4); while the current ROE (4.3) are above than the 5-year average Industry ROE (2.7). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	-8.69	15.95
PPOP%	15.78	4.54
RoA%	-2	1.45
ROCE%	5.9	4.4
ROE%	-8.2	2.7

Valuation & price assessment

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

Over the last 1 years, the stock has delivered a CAGR of 28.62% based on the current price.

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

	9Y	5Y	3Y	1Y
Share Price CAGR	-	-	-	28.6%

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	-	8.56	28.96
Price to Book	1.19	1.11	1.11
Price to Sales	1.45	1.31	9.10
EV to EBITDA	19.48	11.77	11.77

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

The current Price to book ratio (P/B) 1.19% is higher than its historical median of 1.11%, 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 Microfin Ltd return on invested capital (ROIC) is 3.93% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

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