India's Muthoot Finance drops as Kotak flags near-term challenges

IIFL Finance

15/05/2025 06:50

** India's Muthoot Finance MUTT.NS slumps 5.7% to 2,131 rupees

** Gold loan financier beat fourth-quarter profit estimates but Kotak analysts flagged near-term risks for the lender

** Reserve Bank of India (RBI) proposed a loan-to-value (LTV) ratio limit of 75% which would apply throughout the loan tenure and not just at origination

** A cut in LTV will pose a risk to margins and growth, says Kotak

** Moreover, with high growth, competition in the sector is likely to increase, Kotak says citing IIFL Finance IIFL.NS resuming gold loans and Bajaj Finance's BJFN.NS strong gold loan growth

** Brokerage downgrades MUTT to "reduce" from "add" with fair value at 2,275 rupees from 2,250 rupees

** Avg rating on MUTT at "buy"; median PT is 2,500 rupees - data compiled by LSEG

** Stock trims YTD gains to 0.4%

 (Reporting by Kashish Tandon in Bengaluru)

 ((Kashish.tandon@thomsonreuters.com))