Our 28th company in the Series of Best Stocks to Buy in India for Short term 2022 is Muthoot Finance Ltd.
This company is good for investing purpose or not ?
Let’s start with the Company profile
Company Profile :
Muthoot Finance Limited is a non-banking financial company (NBFC), which is engaged in providing loan (financing) against collateral of gold jewelry.
Now Let’s check the important fundamental figures of this company. This is a large cap company with Market Cap ₹54,675cr. We can check more fundamental details below in depth:
Company Fundamental Detail :
PE Ratio: 14.41
Sector PE Ratio: 21.75
PE Ratio of this company is low than Sector’s PE. So it’s a Good PE than the peers of this company.
PB Ratio : 3.48
Sector PB Ratio : 2.44
PB Ratio of this company is low than Sector’s PB ratio. So it’s Good PB than the peers of this company.
Dividend Yield : 1.46%
Sector Dividend Yield : 0.59%
Dividend Yield of this company is high than Sector. Dividend of this is Good than the peers of this company.
ROE: 24.42%
ROCE: 29.21%
ROE (Return on equity) and ROCE (Return on capital equity) is Average.
According to above data, this company is looking fundamentally average. Now We’ll check the company Financially data:
Company Financial Detail
| Year | Revenue(cr.) | Profit(cr.) |
| 2021 | 11,566.42 | 3,804.40 |
| 2020 | 9,707.27 | 3,138.24 |
| 2019 | 7,601.05 | 2,078.02 |
| 2018 | 6,781.68 | 1,829.81 |
We should check now liabilities of company also in the below table
Total Current & Non Current Liabilities
| 2021 | 2020 | 2019 | 2018 |
| 52,867.61 | 42,865.24 | 31,660.19 | 25,741.91 |
Liabilities of a company refers to the debt of that company. We should also aware the debt of company. In 2021 , Company have 52,867.61 Cr. debt.
Let’s check the Free Cash flow of the company
Free Cash flow
| 2021 | 2020 | 2019 | 2018 |
| -7,905.77 | -5,062.08 | -4,901.10 | -1,468.55 |
Debt Level: MUTHOOTFIN’s net debt to equity ratio (237.2%) is considered high.
Reducing Debt: MUTHOOTFIN’s debt to equity ratio has reduced from 338.9% to 289.6% over the past 5 years.
Debt Coverage: MUTHOOTFIN’s operating cash flow is negative, therefore debt is not well covered.
Interest Coverage: Insufficient data to determine if MUTHOOTFIN’s interest payments on its debt are well covered by EBIT.
Share Holding Pattern
| Promotor Holding | Foreign Institution | Mutual Fund | Other Domestic Institutions | Retail & Others | |
| Jun 2021 | 73.37% | 13.67% | 7.12% | 1.37% | 4.48% |
| Mar 2021 | 73.37% | 14.16% | 7.12% | 1.37% | 4.20% |
| Dec 2020 | 73.37% | 15.02% | 6.89% | 0.41% | 4.29% |
| Sep 2020 | 73.37% | 15.99% | 6.89% | 0.41% | 4.29% |
Above table showing there is no big change in Promotor Holding which is 73.37% in June 2021. FIIs invested in June 2021 with 25.32% and retail investor is 4.48% .
Investment Checklist for Muthoot Finance Ltd.
- The company is currently profitable
- Debt is not well covered by operating cash flow
- Dividend of 1.46% is not well covered by earnings
- Earnings are forecast to grow by an average of 16.1% per year for the next 3 years
- Share price has been stable over the past 3 months
- The company’s earnings are high quality
- Profit margins improved or MUTHOOTFIN became profitable
- They have sufficient analyst coverage
- Shareholders have not been meaningfully diluted in the past year or recently listed
- Revenue is meaningful (₹76B)
- Market cap is meaningful (₹548B)
- MUTHOOTFIN does not have negative shareholders equity.
According to its historical performance we can predict stock target.
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Entry Buying Zone : Premium members can see only
Target: Premium members can see only
Time Horizon:Premium members can see only
Risk Profile: Premium members can see only
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Entry Buying Zone : 1200 to 1300
Target: 1800 (45% Upside)
Time Horizon: 6-8 Months
Risk Profile: Low Risk (Stock is 1.88x as volatile as Nifty)
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Hope you liked Our 28th company in the Series of Best stocks to buy in India for short term 2022. We tried to cover many important things about this company, if you think anything left to cover, you can comment us and we’ll try to cover those things also.
Disclaimer: This is an Educational Initiative and is NOT registered under any SEBI regulations. All the information that we provide is just for Educational purposes and you should consult your financial adviser before taking any investment decision. Also we do NOT provide any form of Stock Tips or Advise on stocks or portfolios. My All Trades Only Education Purpose. All trades will be at your risk. You have the responsibility of any trade or any benefit or loss