Shares of Muthoot Finance Ltd gained as much as 16.5 per cent on Thursday after the lender reported a 52.4 per cent jump in consolidated net profit at Rs 835.78 crore in the March quarter due to higher demand for gold loans.

The company’s consolidated loan assets under management increased 22 per cent to Rs 46,871 crore in 2019-20. Majority of its revenue comes from gold loans, while it also has some presence in vehicle finance, affordable home finance and micro loan segment through its various arms.

IDBI Capital in a note said, ‘Muthoot Finance with 88 petr cent of AUM towards Gold loan portfolio should be better off than other NBFCs. Lower provision has improved asset quality and management expects no further requirement of provisions for pandemic due to gold loan business model. For FY2021 expects 10 per cent AUM growth vs 5 per cent YoY earlier as it confident of 15 per cent gold loan growth in FY2021.” The brokerage has a buy rating on the stock.

The company said there has been no significant impact on the operations and financial position of the company on account of the outbreak of the pandemic and over the past two quarters, Muthoot Finance had raised $1 billion from external commercial borrowings.

Analysts at Nirmal Bang said, “During the quarter, the company mobilized nearly Rs 4400 crore worth of External Commercial Borrowings, accounting for 20.3 per cent of the overall borrowings in March quarter. Liquidity remains comfortable and is likely to remain high in FY2021, in line with the trend across the lending space. Revised estimates for FY2021/FY2022 and valuing the stock at 2.6 times FY2022E price to book value.” The brokerage has a buy rating on the stock.

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Muthoot Finance Ltd is the largest gold financing company in India in terms of loan portfolio.