Goal: ₹205
CMP: ₹164.10
At its analyst/investor meet, MGFL’s senior administration crew showcased the corporate’s capabilities in its non-gold enterprise together with MFI, automobile finance, residence finance and MSME & allied merchandise.
Past its view/outlook on the gold enterprise, MGFL introduced a drill-down on every of its non-gold companies, together with a peek into its sourcing, underwriting and assortment processes, how these companies have efficiently navigated Covid and have reverted to pre-Covid enterprise indicators and readiness to now exhibit wholesome AUM progress and profitability in non-gold companies.
To mitigate the cyclicality within the gold mortgage phase, MGFL has been actively diversifying into non-gold segments, with the share of non-gold merchandise within the firm’s AUM combine at 47 per cent (vs. 37 per cent YoY).
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The administration has acknowledged that it’ll not pursue mortgage progress at the price of a compression in spreads, which we imagine will proceed to be a driver for greater profitability. MGFL trades at 1.0x Sep’25E P/BV and we imagine that there’s a scope for a re-rating in valuation multiples for a franchise that may ship a sustainable RoE of about 20 per cent.
Threat-reward for MGFL is beneficial and we preserve our Purchase score with a revised goal value of ₹205 (based mostly on 1.2x Sep’25E consolidated BVPS)
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