In this project I had done ratio analysis of Muthoot Finance

1. Research report on Muthoot Finance
Harshit Goyal
A020
40308190014
Bachelor’s in Financial Markets
Topic – Ratio Analysis of a Company
Harshit Goyal | LinkedIn

2. HARSHIT GOYAL A020
40308190014
2
INTRODUCTION
Even before the word "ethos" had found a place in the corporate lexicon, Muthoot
Finance Ltd. had imbibed a work culture that was based on conscience. Ever since
its inception, the company has nurtured trust as its most prominent value. We are
committed to keeping this heritage alive throughout the generations to come. At
Muthoot Finance Ltd. we are committed to creating a balance. We believe in a
simple yet profound theory of "from excess or scanty, to appropriateness".

3. HARSHIT GOYAL A020
40308190014
3
MUTHOOT FINANCE
A prominent example of this is our financial inclusion policy. The company provides gold loans on
extremely easy terms and conditions to people of each segment of the society. Our gold loan range
begins from ₹ 1500 and there is no maximum limit. Driven by the invaluable trust and commitment
that people have shown in us through centuries, we have created a reputable market image.
Muthoot Finance Ltd. is an Indian financial corporation and the largest gold loan NBFC in the country.
In addition to financing gold transactions, the company offers foreign exchange services, money
transfers, wealth management services, travel, and tourism services, and sells gold coins. The
company's headquarters are in Kerala, India, and it operates over 4,400 branches throughout the
country. Outside India, Muthoot Finance is established in the UK, the US, and the United Arab
Emirates.
The company falls under the brand umbrella of the Muthoot Group. Its stocks are listed on the
Bombay Stock Exchange (BSE) and NSE. As of March 2012, revenue (after expenditure) stood at
more than ₹23,000 crore (US$4.2 billion). The target market of Muthoot Finance includes small
businesses, vendors, farmers, traders, SME business owners, and salaried individuals.

4. HARSHIT GOYAL A020
40308190014
4
KEY FACTS
Market Cap: R 58,260.17 Cr
Revenue (TTM): R 11,882.14 Cr
Earnings (TTM): R 3,939.78 Cr
Net Worth: Rs. 15,727.33 Cr
Promoters' Ownership: 73.40%
52 Week Range: R 1,000.00 - 1,638.85
Shares Outstanding: 40,11,99,411
10 Years Aggregate:
1. CFO: -26,761.89 Cr
2. EBITDA: 43,322.35 Cr
3. Net Profit: 12,982.55 Cr

5. HARSHIT GOYAL A020
40308190014
5
Ratio Analysis
Ratio analysis compares line-item data from a company's financial statements to reveal
insights regarding profitability, liquidity, operational efficiency, and solvency.
Ratio analysis can mark how a company is performing over time, while comparing a company
to another within the same industry or sector.
While ratios offer useful insight into a company, they should be paired with other metrics, to
obtain a broader picture of a company's financial health.
Ratios are comparison points for companies. They evaluate stocks within an industry.
Likewise, they measure a company today against its historical numbers. In most cases, it is
also important to understand the variables driving ratios as management has the flexibility to,
at times, alter its strategy to make its stock and company ratios more attractive. Generally,
ratios are typically not used in isolation but rather in combination with other ratios. Having a
good idea of the ratios in each of the four previously mentioned categories will give you a
comprehensive view of the company from different angles and help you spot potential red
flags.

6. HARSHIT GOYAL A020
40308190014
6
Market Prospects Ratio
1. P/E Ratio
The price-to-earnings (P/E) ratio relates a company's share price to its earnings per share.
A high P/E ratio could mean that a company's stock is overvalued, or else that investors are
expecting high growth rates in the future.
Muthoot Finance P/E Ratio – 15.22
Sector P/E Ratio – 25.92
Muthoot Finance looks relatively cheap to its sector. It may be because gold financing business is still
in nascent stage in India. It has more room to grow.
2. P/B Ratio
The P/B ratio measures the market's valuation of a company relative to its book value.
The market value of equity is typically higher than the book value of a company,
P/B ratio is used by value investors to identify potential investments.
P/B Ratio – 4.82
Sector P/B Ratio – 2.24
3. Dividend Yield
The dividend yield–displayed as a percentage–is the amount of money a company pays shareholders
for owning a share of its stock divided by its current stock price.
Mature companies are the most likely to pay dividends.
Dividend Yield – 1.39%
Sector Dividend Yield – 0.55%
It pays more dividend than its sector, which may be good for investors who largely depends on
Dividends.

7. HARSHIT GOYAL A020
40308190014
7
Profitability Ratio
Return on Assets (RoA)
Profitability is assessed relative to costs and expenses and analyzed in comparison to assets to see
how effective a company is deploying assets to generate sales and profits. The use of the term
"return" in the ROA measure customarily refers to net profit or net income—the value of earnings
from sales after all costs, expenses, and taxes. ROA is net income divided by total assets.
Return on Assets – 6.18%

8. HARSHIT GOYAL A020
40308190014
8
Return on Equity – 27.8%
ROE is a key ratio for shareholders as it measures a company's ability to earn a return on its equity
investments. ROE, calculated as net income divided by shareholders' equity, may increase without
additional equity investments. The ratio can rise due to higher net income being generated from a
larger asset base funded with debt

9. HARSHIT GOYAL A020
40308190014
9
Other Key Factors

10. HARSHIT GOYAL A020
40308190014
10
Other Ratios
Operating Profit Margin – 80.2%
Return on Capital Employed – 15.5%
Book Value Per Share – 392
Earnings Per Share – 97.9
Peers
Name Ticker Sub-Sector Market Cap PE Ratio PB Ratio
Bajaj Finance Ltd BAJFINANCE Consumer Finance 371655 84.09 10.07
Muthoot Finance Ltd MUTHOOTFIN Consumer Finance 57905 15.22 4.82
Chola. Fin. CHOLAFIN Consumer Finance 41142 27.05 4.29
AU Small Finance Bank Ltd AUBANK Consumer Finance 40324 34.44 6.43

11. HARSHIT GOYAL A020
40308190014
11
Harshit Goyal (BFM)
40308190014 – A020