Highlights:

The consolidated AUM of the company has increased by 22% to Rs 46831 crore, while standalone assets under management increased by 22% to Rs 41611 crore. The AUM of subsidiaries moved up 24% to Rs 5655 crore.

The profit for the group, Muthoot Finance contributed Rs 2993 crore and subsidiaries Rs 176 crore in FY2020.

Among the subsidiaries, Muthoot Home Finance grew loan book by 4% to Rs 2000 crore. Its Stage 2 assets on gross loan stood at 1.71%.

The Belstar Micro Finance grew its portfolio by 43% to Rs 2631 crore and posted improved net profit of Rs 99 crore.

Muthoot Insurance Brokers also showed a profit of Rs 11 crore in FY2020 as against Rs 15 crore last year.

The Sri Lankan subsidiary increased its loan portfolio to LKR 1384 crore, which is approximately Rs 500 crore of Indian rupees. It is gradually converting itself from a mix of NBFCs to a pure gold loan company. Today, around 35% of the portfolio is gold loan, and the company plans to bring it to just like Muthoot Finance to a 90% plus portfolio of gold loan.

Muthoot Money, a new vehicle finance subsidiary operating in the States of Telangana and Andhra Pradesh, has started extending loans for commercial vehicles and equipment. It has increased its loan portfolio to Rs 509 crore as against Rs 311 crore a year ago.

The company is able to maintain good liquidity position right from last September when there were liquidity issues after the issue of the IL&FS and thereafter with the issues with regard to Dewan Housing Finance, etc. All commitments are being honored on time.

The company has not asked or requested for any moratorium from any of the lenders

Muthoot Finance has more than 90% of portfolio on gold alone, there is no impact of the moratorium because gold loans generally are although taken for a year but are closed in 4 to 5 months. Also, the average lending is less than 70% LTV. At the current price, the LTV is only at about 52% to 53%, so the company has a 48% cushion or margin.

The group branch network stands at 5330 branches, up 6% over a year ago. The company has added some branches in Muthoot Finance, while it plans calibrated branch expansion next year.

The average gold loan per branch has increased 19% from Rs 7.5 crore to Rs 8.93 crore, while the number of loan accounts moved up to 80 lakhs of loan accounts.

The average ticket size has increased from 41000 to 50000, and the employee count has just increased from 24000 to 25000 employees.

In the subsidiaries businesses, the company is looking at only calibrated growth and sees how things are panning out before going aggressive on lending. So the company is not planning any aggressive growth in the subsidiaries.

However, in the goal loan business, the company would be able to achieve about 15% growth in FY2021.

The company does not see any challenge in raising funding for the growth and a good part of that can come from its own resources. The company would raise funds from banks, mutual funds, NCDs international funding etc. The company has a very diversified liability mix.

After April branches started opening, while the 50-60 branches in Mumbai and Pune have also opened in last 10 days. About 95% of staff is coming to the branch and 100% of branches are also opened. The branch business and branch functioning is almost normal.

Customer footfalls may be 60-70% of normal level. The lack of public transport is one of the reasons for below normal footfall. In the last 3 to 4 weeks, the company is seeing more people coming for taking gold loans than releasing the gold loans and the company will be able to achieve a growth of 15% plus in the gold loan business in FY2021.

Muthoot Finance has not got any request for moratorium from any customer because average tenure of the loan is only 4 to 5 months. The company may not do any auctions during this period of moratorium. However, the company is in the money and don't need to auction any gold.

The customers are coming and taking back the gold, which has reached more than 12 months. So the company does not see any moratorium impact on the Muthoot Finance.

The vehicle finance and the housing finance subsidiary has given moratoriums only post 1 April, so there is no provisions for moratoriums for home loans and vehicle finance businesses in Q4FY2020. But the company expects Rs 15 crore of provision for the housing finance company in Q1FY2021.

The housing finance company has around 22,000 customers and roughly about 6,000 to 7,000 customers are currently under moratorium.

In the microfinance 95% collections was achieved so moratorium was not extended. The company has extended moratorium in April and May to all the customers. In April, the collection were at only 16-17%, while the collections have picked up to 35% in May 2020 and its expected further increase to 65% in June 2020. And the remaining will be treated as moratorium effects and the necessary provisions will be done.

On the cost of borrowing, banks are not significantly reduced their cost. However, the cost on money market instruments has significantly come down. The company is expecting the cost of borrowing on NCDs to significantly come down.

The yields on loans for the company are quite adequate to protect margins. In current environment, the company has also stopped some of the low-yielding products also.

There could be a possibility of slightly lower, but still the company should be able to manage a good return on asset.

The company always has an 80% plus of repeat customers for business.

The company is not planning to do aggressive business in the subsidiaries. So, the subsidiaries will not need any capital in the next 1 year.