Muthoot Finance Ltd Registers an Increase in Net Profit of 42%

KOCHI:
Muthoot Finance Ltd (MFIN), the largest gold financing company in India in terms of loan portfolio, registered an increase in net profit of 42%, at Rs.1388crs for H1 FY20 as against Rs.975crs in the previous year. Loan Assets stood at Rs.35731crs as at September 30, 2019 as against Rs.32319crs as at September 30, 2018, Y-o-Y growth of 11%.

Muthoot Homefin (India) Ltd (MHIL), the wholly owned subsidiary, increased its loan portfolio to Rs.2098crs as against previous year of Rs.1775crs, a YoY increase of 18%. During Q2 FY20, loan portfolio increased by Rs.110crs, QoQ growth of 6%. Total revenue for Q2 FY20 & H1 FY20 stood at Rs.91crs & Rs.152crs as against previous year total revenue of Rs.55crs & Rs.104crs . It achieved a profit after tax of Rs.14crs & Rs.20crs in Q2 FY20 & H1 FY20 as against previous year profit of Rs.11crs & Rs.21crs. Its Stage III Asset on Gross Loan Asset % as on September 30, 2019 stood at 1.10%.

Belstar Microfinance Private Limited (BMPL) , an RBI registered micro finance NBFC and Subsidiary Company where Muthoot Finance holds 70.01% stake, grew its loan portfolio to Rs.2107crs as against last year of Rs.1381crs, a YoY increase of 53%. During Q2 FY20, loan portfolio increased by Rs.169crs. It achieved a profit after tax of Rs.28crs & Rs.51crs in Q2 FY20 & H1 FY20 as against previous year profit after tax of Rs.16crs & Rs.29crs. Its Stage III Asset on Gross Loan Asset % as on September 30, 2019 stood at 1.02%.

Muthoot Insurance Brokers Pvt Limited (MIBPL), an IRDA registered Direct Broker in insurance products and a wholly owned subsidiary company generated a total premium collection amounting to Rs.71crs & Rs.132crs in Q2 FY20 & H1 FY20 as against Rs.67crs & Rs.116crs in the previous year. It generated a Profit after Tax of Rs.4crs & Rs.7crs in Q2 FY20 & H1 FY20 as against Rs. 4crs & Rs.6crs in the previous year.

The Sri Lankan subsidiary – Asia Asset Finance PLC. (AAF) where Muthoot Finance holds 72.92% stake, increased its loan portfolio to LKR 1314crs as against last year of LKR 1124crs, a YoY increase of 17%. During Q2 FY20, loan portfolio increased by LKR 24crs. Total revenue for Q2 FY20 & H1 FY20 stood at LKR 86crs & LKR 166crs as against previous year total revenue of LKR 69crs & LKR 138crs.

It generated a profit after tax of LKR 3crs & LKR 5crs in Q2 FY20 & H1 FY20 as against previous year profit after tax of LKR 2crs & LKR 4crs. Muthoot Money Ltd (MML), became a wholly owned subsidiary of Muthoot Finance Ltd in October 2018. MML is a RBI registered Non- Banking Finance Company engaged mainly in extending loans for vehicles. The operations are now centered in Hyderabad. Recently, Company has started extending loans for Commercial Vehicles and Equipments. During Q2 FY20, it has increased its loan portfolio to Rs.426crs. During Q2 FY20, loan portfolio increased by Rs.34crs. Total revenue for Q2 FY20 & H1 FY20 stood at Rs.17crs & Rs.31crs.

Commenting on the results M G George Muthoot, Chairman stated, “We are glad to announce that consolidated loan assets of the Group grew by 13% at Rs.40390crs during H1 FY20 as against last year of Rs.35835crs. Consolidated Profit increased by 42% at Rs.1472crs during H1 FY20 as against last year of Rs.1033crs.”

Speaking on the occasion George Alexander Muthoot, Managing Director said, “During the quarter, the Company got rated by 3 International Credit Rating agencies – Fitch Ratings at “BB+/Stable”, S&P Global at “BB/Stable” & Moody’s Investor Service at “Ba2/Stable . In October 2019, Company raised 450 Million USD through issuance of 6.125% Senior Secured Notes making the first private sector NBFC to make a debut issue under 144A/Reg. S mode”

1.Public Issue of Non-Convertible Debentures
During October 2019, Company successfully completed 21st Public Issue of Non-Convertible Debentures raising Rs.459crs.

2.Muthoot Finance obtains credit ratings from three International Credit
Rating Agencies – Fitch Ratings, S&P Global Ratings and Moody’s Investor Service
Muthoot Finance Ltd has been assigned Long Term rating of ‘BB+’ with ‘Stable’ Outlook by Fitch Ratings. S&P Global Ratings has assigned a Long Term rating of ‘BB’ with ‘Stable’ Outlook. Moody’s Investor Service has assigned ‘Ba2’ Corporate Family Rating with ‘Stable’ Outlook.

According to Fitch Ratings report, ‘The ratings take into account Muthoot Finance’s well- established franchise in the niche segment of gold-backed financing, its low credit losses and satisfactory leverage. ’

According to S&P Global Ratings report, ‘The ratings on Muthoot Finance are driven by the company’s very strong capital and earnings, with the risk-adjusted capital ratio at above 45%. Muthoot Finance also has a strong market position in loans against gold although it is relatively small in the overall financial sector in India.’

According to Moody’s Investor Service report, ‘Rating takes into account the company’s(1) leading franchise and well established track record in lending against the gold jewelry segment in India, and (2) strong solvency metrics, including asset quality, capital and profitability’

3.Muthoot Finance Ltd raises USD 450 million from International Bond Markets
First Private Sector NBFC debut issue in Rule 144A / Reg S format Muthoot Finance Ltd (“MFIN” or “Company”), the largest gold loan company in India, has successfully priced a USD 450 Million Fixed Rate Senior Secured issuance in 144A / Reg S format for a 3 year tenor at 6.125%. MFIN bond transaction marks the first international bond by a NBFC to debut in 144A / Reg S market, allowing it to tap the US investor base in addition to Asia and Europe. The proceeds will be used for permitted purposes including onward lending in accordance with RBI’s ECB Guidelines and other applicable laws.

The Company engaged with investors during an extensive deal roadshow across Singapore, Hong Kong, London and US. Backed by strong investor feedback, the transaction was launched with an initial price guidance of 6.375% area. Following a strong order book momentum supported by high quality real money investors, the Company was able to tighten pricing by 25bps to 6.125%.

The final order book was in excess of USD 1.2 Billion with oversubscription of more than 2.5x. The transaction witnessed 37% participation from Asia, 28% from Europe & Middle East and 35% from US with 88% investments from asset managers, 6% from Insurance & Pension Funds and 6% from others.

The bonds will be listed on International Securities Market of the London Stock Exchange. Earlier this month, Company had obtained issuer rating Long Term rating of ‘BB+’ with ‘Stable’ Outlook by Fitch Ratings, ‘BB’ with ‘Stable’ Outlook by S&P Global Ratings and  ‘Ba2’ Corporate Family Rating with ‘Stable’ Outlook by Moody’s Investor Service.

Deutsche Bank and Standard Chartered Bank acted as the Joint Global Coordinators and Joint Book Runners for the issue. M.G.George Muthoot, Chairman, on this inaugural issue stated “The response from international bond investors to our debut international bond issue once again reiterates the robustness and on track record of our  gold loan business  and is a recognition of India’s retail credit story. This fund raise will enable us in further diversifying and strengthening our sources of funding. We look forward to strengthening our partnership with global investors”