 "The company is now valued at $7 billion, a size that may spur MSCI to include the stock in its gauge at the quarterly review due in August")
India's Muthoot Finance reported a smaller-than-expected rise in second-quarter profit on Thursday, hurt by high finance costs.
The gold financing company said its profit rose 14.3% to Rs 991 crore ($119.00 million) for the quarter ended Sept 30, missing analysts' expectation of Rs 1,041 crore, according to LSEG data.
Muthoot's profit miss comes amid a high cost of funds as the Indian central bank kept lending rate steady at 6.50% in its fourth straight policy meeting in October. It has raised rates by 250 basis points since May 2022 in a bid to cool surging prices.
Analysts had estimated bank borrowing costs for NBFCs to reprice upwards in first half of FY24.
Kerala-based company's finance costs rose by more than 28%, taking total expenses nearly 30% higher to Rs 1,743 crore.
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The company missed estimates in the June quarter as well, despite posting its first quarterly profit growth in six.
Standalone loan assets under management, however, grew 21% to Rs 690,020 crore for the half-year ended Sept. 30 on steady demand for loans.
Gold prices hit record high earlier this year and though there was some correction, prices were up more than 20% year-on-year in the quarter. Higher gold prices is a positive for gold financiers, as more customers pledge gold as collateral aiding loan growth.
Muthoot's interest income rose nearly 22% to Rs 3,015 crore.
"Our gold loan assets under management demonstrated strong growth, led by strong demand trends in both urban and semi-urban markets," Managing Director George Alexander Muthoot said in a statement.
Muthoot's main rival Manappuram Finance is set to report second-quarter results on Nov. 13.
Shares of Muthoot Finance ended 0.7% lower ahead of the results.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
