Muthoot Microfinance IPO opens on December 18 worth 960 crore

Financial Profile of Muthoot Microfinance: It is the 5th largest NBFC – MFI in terms of assets and has seen an impressive increase in revenue in the last fiscal year, with improved asset quality. In addition, the company has experienced a significant increase in its net interest margin, and there are expectations for further improvement, especially considering the current downward trend in interest rates.NBFC- MFI returns: Return on equity (RoA) has improved above 2 percent (2% improvement or more than 2% improvement?) Return on equity remains above 10 percent. While MML’s RoA has improved, it is still much lower compared to CreditAccess Grameen which generated a RoA of 5 percent in the latest quarter (Q2 FY24). This indicates scope for further improvement.

More about the increased loan portfolio: The company is also the third largest among NBFC-MFIs in South India in terms of total loans, the largest in Kerala in MFI market share, and the leader in Tamil Nadu with almost 16. percent market share. In an interview with Moneycontrol, the company said that it expects more growth from the north.

Shareholding pattern: The promoters, including Muthoot Microfin, hold 69.08 per cent stake in the company and the remaining 28.53 (two parts do not add up to 100) per cent are owned by public shareholders, including Greater Pacific Capital WIV (19.06 per cent) and Investments. Management Company Creation Investments India LLC (9.01 percent stake).

Valuation vs. Peers: On a FY23 basis, Muthoot Microfinance’s valuation appears cheaper than CreditAccess Grameen Limited. But more or less in line with other small finance banks like Equitas Small Finance Banks, Ujjivan Small Finance Banks and above Bandhan Bank and Suryoday Small Finance Bank Ltd. However, MML’s IPO was priced at 1.6 times (premium) book value. Estimated value for FY25.